Tax Demand 2007-08

Alfafan

I have worked as a contract management accountant for many years, principally getting employment through agencies. I have usually been paid by the agencies on a PAYE basis, normally earning about £20-25k a year.

In June 2011 I received a self-assessment statement from HMRC with a Determination for 2007/08 for £35,000. I obviously queried this and was told that I had not submitted a Tax Return for 2007/08 or 2008/09 and that I would have to provide income details for this period.

This proved to be difficult as I had had a disk crash on my PC and had lost much of the information for those periods. I continued to receive statements, adding interest and surcharges and finally a letter from the Debt Management dept saying my file had been passed to them. I continued to get letters and even a visit from one of their officials, by now saying I owed over £40,000!

Because of a serious illness, I was unable to spend much time looking into my income for the relevant periods. Finally in June 2012 I sent a Tax Return for 2008/09, which showed I owed less than £200 for that year. On 31 July I sent the 2007/08 Return, showing I owed about £1,700 for that year, making a total debt of about £2,000.

I have now received a letter, this time from PAYE and Self Assessment, thanking me for the 2007-08 Return, but that the time limit for 2007-08 ran out on 5 April 2012. Because of this, the Determination for £35,000 remains in force. They will reduce the penalties for the years to 2010 to the same amount as the tax I owe for the year.

I have no idea where I’m supposed to go from here. Can anybody give me some advice as to my next step please?

antonic

This is from the HMRC website regarding Self Assessment Determinations :

A revenue determination is an estimate that can be made if you haven't sent in your Self Assessment tax return on time. HM Revenue & Customs (HMRC) estimate the amount of Income/Capital Gains Tax you owe. The determination also forms a basis for Payments on Account for the following return year.
There's no right of appeal against this estimate. The only way to change the amount you have to pay is to send in your Self Assessment return for the outstanding year. In the meantime, you'll still have to pay the amount due. HMRC may take legal action to recover the amount due and any costs. This could involve the removal of your goods to be sold at public auction or HMRC could take court action.


https://online.hmrc.gov.uk/information/help?helpcategory=selfAssessment&helpid=revenueDetermination

And this regarding time limits for replacing determinations

Time limits for determinations and subsequent self assessments

Section 28C(5) and (6)
No determination can be made after the period of three years beginning with the filing date. The 'filing date' means the 31 January filing date for electronic returns or, if the notice requiring the return is issued after 31 October, three months from the date of issue. The determination can only be replaced by an actual self assessment made within that time, or if later, within 12 months of the date of the determination.


http://www.hmrc.gov.uk/manuals/salfmanual/salf209.htm


I think this means you are in trouble and as you have discovered the debt is collectible, even if based on an estimate.


You state that you have had a visit ? - was it from a Field Force Officer to collect ? - if it was this means that the Enforcement process has started against you.


The ultimate sanction that can be taken, if you cant pay and dont have sufficient assets to pay will be bankruptcy (if the debt is for you an individual) - have HMRC mentioned what they intend to do next ?.

Alfafan

What you seem to be saying is that HMRC can raise a Determination based on nothing at all, and if you don't challenge it in time, they can enforce it!

Their amount of £35,000 exceeds any total annual income I've earned over the last 10 years.

This can't be right surely?

chrismac1

I think you need to find a tax specialist. I think there was at least one Tribunal / Adjudication case in 2011 where these draconian penalties were thrown out. Note there is no way in my view you'll get anywhere with the routine HMRC punters on this one, they barely know the basics never mind Tribunal cases HMRC lost. (Much more likely to be trained on the cases HMRC won!). Even senior HMRC management are unlikely to be much help.

Also, as your orginal post on here points out, you were only out of time by a short period and had mitigating circumstances. So I would be confident of your ultimate victory in getting pretty much all of the £35k wiped. But I'd be equally confident this process would take at least a year.

jimmo

From the HMRC point of view a determination is the last resort in trying to bring a rogue taxpayer to book. Tax Returns, fixed penalties (for failure to submit Returns within the time limits and statements of your SA account will have been issued, none of them provoking any reaction from you. Take a look at these links.

http://www.hmrc.gov.uk/manuals/salfmanual/SALF209.htm

http://www.hmrc.gov.uk/manuals/sammanual/SAM121080.htm

　
In terms of the letter of the law I am afraid you are up the proverbial creek without a paddle. The determinations stand, the tax is payable and there is, absolutely, no appeal.

You therefore need to look at what went wrong and whose fault that was.

Perhaps the first thing to look at is the copious amounts of post (Returns, penalty notices, statements of account etc) that HMRC have sent you but you have not received. Have you moved house and not informed HMRC? Have you moved and informed HMRC but they have failed to use your new address?

How come the June 2011 statement actually reached you when all previous correspondence did not?

If you can find fault with HMRC then you have an argument.

If not, what are your reasons / excuses?

To be blunt, a disc crash on a PC is not really a one in a million event. It happens and every PC I have bought over a number of years has come with copious warnings about making backups. So where was your backup when your disc crashed?

Serious illness is a different matter but for how long did it affect you and where does that period fit into the timescale you are looking at (2007/08 to June 2012)?

I am afraid you really need professional help and quickly.

Dazed_and_confused

Could "SACM12210 - Overpayment relief: Equitable liability replaced by special relief" be an option?

antonic

Alfafan wrote: »

What you seem to be saying is that HMRC can raise a Determination based on nothing at all, and if you don't challenge it in time, they can enforce it!

Their amount of £35,000 exceeds any total annual income I've earned over the last 10 years.

This can't be right surely?

Yes they can because you have had 4 years to file the return (and havent).

back_against_the_wall

I used to work for the Inland Revenue (now HMRC) many years ago and was there when the SA system was first introduced. You would not believe the utter mess that followed, with people being put in SA who should not have been and others receiving quite ridiculous demands simply because they had omitted to enter the amount they had paid under PAYE in the absurdly over complicated SA Tax Returns. Whatever their bluster about time limits etc (and, in my experience, time limits were rarely strictly enforced), HMRC are going to have a tough time trying to enforce a debt of £35,000 when your actual Tax Return shows you only owe £1700. They cannot exactly take distraint action for such a sum and it will probably be referred for County Court proceedings but in that event any fair minded judge, if you turn up on the day or submit a letter to the Court with details of the circumstances, may well reduce the claim to the actual amount due of £1700. Before that it might be an idea to request an interview with your nearest Collector of Taxes to explain the situation face to face. Maybe you should not have been put in SA in the first place if you mainly pay your tax under PAYE. If all else fails write to your MP.