Tax Return £100 fine

mattyh

My wife has just received a £100 fine for not completing her tax return (albeit to our old address, redirected).

Can someone advise how best to deal with this? She used to run a business from home, but this has been dormant and no income was produced between 04/05 and 04/06. From 07/06 she has been in full time employment paying tax via PAYE - we assumed therefore that this would be obvious and a tax return would not be necessary. We cannot remember for sure if we received a tax return form last year....

I'm just not sure the best way to deal with this. Shall we ignore it as it's to our old address anyway? Or shall we send back the appeal form explaining that she's in full employment and no further tax is due?

Have I got my facts right in that the maximum fine can be no more than the amount due, in this case 0, so even if she's made to do a tax return the £100 isn't enforceable anyway?

Any help most appreciated!

going2die_rich

Can't help with any of the other questions, but NEVER try and hide away from a fine from the Inland Revenue. Doesn't matter if it's at your old address or not, they will find you sooner or later if needs be.

Why don't you just ring up and ask them. As bad as the taxman image is, they aren't going to try and con you if they are in error of no fine being payable.

ceebeeby

.... I am soooo. very sceptical about our lovely IR. A couple of years ago I completed my tax return, from memory I think it was in September. Took a copy of it, and wrote on the copy the date of despatch (just the way I'd always done). The following March I arrived back from a weeks holiday to a bill of circa. £300. £200 for tax owing and £100 fine for non-submission.

I phoned IR straight away, offered to pay the £200 (how did they know I owed £200 if they hadn't received my return), but disputed the £100. Chap said, oh, obviously a mistake, don't worry about it, you don't need to pay. I asked for written confirmation from him.

Few weeks later no confirmation had arrived. I phoned back again. Second man said the first one had been talking rubbish, and of course I had to pay. He asked if I had any proof that they'd received it (I mentioned the £200, but he started going on in massively technical terms about how they'd arrived at that conclusion), the long and the short was, I could tell him what date it had been posted, but not what date they'd received it (my telepathy skills weren't working that day!!) and that they'd added daily interest to the fine .... lovely.

No problems paying any tax due but am now very sceptical. I reckon they have "fine" targets and if they don't reach them, they start looking at any not sent recorded delivery (which i now always do!)

To OP, I think you'll have to pay .... x

mattyh

Thanks for the replies. Let me be clear though, there's no way on earth we'll ever pay that £100 - i'm just asking the best way of tackling it.

From 93(7) on inland revenue website:

'Explains that penalties are reduced (capped) to the amount unpaid at the filing date where this is less than the amount of the fixed penalty '

Surely that means if no tax is payable, no penalty can be made?

WHA

mattyh wrote:

Thanks for the replies. Let me be clear though, there's no way on earth we'll ever pay that £100 - i'm just asking the best way of tackling it.

From 93(7) on inland revenue website:

'Explains that penalties are reduced (capped) to the amount unpaid at the filing date where this is less than the amount of the fixed penalty '

Surely that means if no tax is payable, no penalty can be made?

By law, if HMRC have asked her to complete a tax return, then she has to complete it, even if there is nothing to declare, in which case all she has to do is sign it and send it back. Until HMRC receive the tax return, they don't know that the tax due is nil and won't reduce the fine. In fact, if the tax return continues to be not-submitted, there'll be another fine to pay after six months. These fines won't go away until the tax return is submitted and eventually, they will start court action and ultimately bankruptcy proceedings if the tax return isn't submitted. That is the way the law is enforced.

You cannot ignore it "because you've moved" - HMRC know her NIC number and tax reference number and will quickly trace her with her new employment.

The worst thing you can do with HMRC is ignore them - they never go away - I've dealt with the repercussions of loads of people who have moved without telling HMRC, stopped or started self employment without telling HMRC, etc., - eventually they need to be dealt with. In actual fact, I've just been dealing with a lovely couple who have been made bankrupt because they didn't fill in tax returns "because they didn't think they needed to" - they just kept ignoring the letters, court summonses etc as they believed they knew no tax was due. Now its going to cost them a lot of time and money to try to get themselves out of bankruptcy.

Remember the name "self assessment" gives the game away - each individual is legally required to "self assess" if their circumstances dictate. HMRC aren't mind-readers, don't know that you've moved or started/stopped self employment if you don't tell them, and with circa 40 million taxpayers, they can't match up everyone's records to make sure that the right amount of tax is paid. Yes, they have access to loads of information, but that is only used to randomly check certain people's tax affairs - not to work out everyone's tax bills.

The best thing to do is complete and submit the missing tax return(s) - then the whole episode will be over quickly and the penalties will be waived.

mattyh

Good post and good advice, thanks for the reply.

ctm_2

ceebeeby wrote:

No problems paying any tax due but am now very sceptical. I reckon they have "fine" targets and if they don't reach them, they start looking at any not sent recorded delivery (which i now always do!)

Sorry, but that is complete and utter rubbish. They do not have fine targets or anything like it.

How it works:
At some point after the 31 January (when returns are due) the computer goes through, and for every case where a return was due, but was either received after the deadline, or has not been received at all a £100 penalty is charged. All by computer, all on it's own, not by a person.

The person who receives the penalty then can either pay it, or appeal against it. If the liability is less than the penalty then the penalty will be capped to match the liability.

Any appeal against a penalty must be in writing, within 30 days of receiving the penalty notice. An appeal will not be considered until the return has been received.

In your appeal you state your excuse for sending your return in late, and it will then be looked at, and if they agree your excuse is reasonable and valid the penalty will be cancelled. If they don't, then you will have to pay the penalty or go to the commissioners who will make a decision.

So, in the case of MattyH, you can appeal (and probably should, if you don't ask, you don't get. What is the worst that can happen?) stating your excuse, but the first thing you should do is file any outstanding returns.

Just filing the returns will possibly get rid of the penalties anyway.

As has been said, yous hould definately NOT ignore it. It won't go away.