Penalty Notice received

Toto

Hi all,

I run a limited company which just employs two directors full time, everyone else who works for us works on a sub contract basis. Neither of the directors take any salary at all, although we have a pretty high turnover we usually run at a loss, the reason for this is that every penny and more of the profit is re-invested into the company to purchase equipment to stop us having to hire anything. The business is pretty healthy but as said we would rather not take an income directly from the business, we both earn a living by doing sub contract work for other companies and by working as musicians, we both file annual returns for our tax as individuals.

For the past 2 years we have had a book keeper who pretty much does everything to do with tax and the accounting side of things. I just write the cheques for the VAT etc. Today I have received a letter from the inland revenue which says we have not filed an annual return for PAYE under regulation 73 income tax since may of 2006. This is £100 per month so the bill is £900. This is the first I have known about this and it seems a bit wrong that I have not been told at all for 9 months. I do remember a conversation with the inland revenue over 1 year ago who said they would send me a form and all I had to do was declare 0 income for the directors for the PAYE. I am pretty sure they sent me a book of payment slips but that's about it. I had assumed that the book keeper had been dealing with this, partly because it's her job to ensure all of our tax returns etc are up to date (sending me anything which needs signing or payment) and also because I haven't heard a thing from the IR.

Can I appeal against the £900 penalty? And on what basis? I can't really ask them to reconsider because of a mistake or a breakdown in communication. Can anyone offer any advice? I feel that I might need to take this £900 on the chin and take control of all tax issues from the book keeper which kind of defeats the object of having her, we are out on jobs over 100 hours most weeks so we felt it was better to have someone who was dedicated to dealing with this stuff while we are on the road, so nothing gets missed and we don't end up with penalties.

Can anyone offer any advice?

WHA

Find out the facts first. Was the annual return submitted or not? Don't assume your book-keeper didn't do it - have you asked? HMRC have apparently issued sack loads of these, all dated 12 March, and all for £900 fine - it sounds as if it is more likely an error at their end. Just write back and tell them when the return was submitted, and ask for written confirmation they have received it and have cancelled your penalty. If, however, it hasn't been submitted, then you'll probably have to pay up.

Cleasby_2

Reg 73 - An employer must deliver a return containing ...Reg 73(2)(b) "the total amount of the relevant payments made by the employer during the tax year to all employees in respect of whom the employer was required at any time during that year to prepare or maintain deductions working sheets,"

According to the facts recorded by you, you were not required to prepare deductions working sheets. Therefore you were not required to make a return. Therefore HMRC cannot fine you for not making a return.

I suggest you appeal on these grounds.

khdgsa

As WHA stated, it seems a lot of these were sent out - I received what sounds like exactly the same letter.
My accountant suggested I tell HMRC to "stick it where the sun doesn't shine !". I decided to be a little more tactful and gave them a call and was told it was sent in error.
I (and my accountant) thought this was a type of pfishing - many people will send their £900 because they thought they'd made a mistake, and will then appear on HMRC's radar as someone to have a look at, even if the money is refunded later.