HMRC and self assessment penalties

rorysdad

Hi

What is the position with unpaid self assessment penalties - ie: the charges that HMRC claim for failing to submit self assessment forms?

I have letters claiming £700 in penalties. I have never been self-employed - however about 11 years ago I started to get them when I was a Director a company.

What should I do? What action are HMRC likely to take if I ignore the letters?

RD

jennifernil

You don't need to be self employed to be asked to fill up a self assessment, anyone can be asked to do it. We are pensioners and my husband has to complete one every year.

If you are asked, I would think it unwise to not comply, it is not that difficult after all.

Yes, there are penalties for not doing so, but having always complied, I have no idea how they enforce them. Bound to be some info regarding that on their website.

It used to be that if there was no tax to pay, the penalty was zero, but this changed recently.

suso

What Years are the penalties for ?

anything upto 09/10 and once the return is completed, the penalties are capped at the amount of tax due. eg no tax due penalties reduced to zero.

for 10/11 onwards, the penalties are based on when the return is completed, regardless of tax due and a return issued in April 2011 and not yet completed will have approx £1300.00 of penalties applied so far.

rorysdad

Thanks for the replies.

I am worried what will happen if I don't pay the penalties.

What enforcement action will HMRC take?

RD

suso

Estimate the tax due - this will be wildly in their favour and issue a determination.

Don't pay the determination or complete a return - they will apply for bankruptcy.

HMRC will apply for bankruptcy even if the likelihood of getting the tax back is small, or the cost outweighs the rewards

jimmo

Even if you pay the penalties HMRC still want the outstanding Returns from you.

Determinations are a whole different ball-game and in your particular case, HMRC thinking will be along the lines that if £700 worth of penalties haven’t stirred you into action you must be hiding much, much more.

Take a look at this thread from a couple of days ago.

https://forums.moneysavingexpert.com/discussion/4184755

　

bartnwood

rorysdad wrote: »

Thanks for the replies.

I am worried what will happen if I don't pay the penalties.

What enforcement action will HMRC take?

RD

Hello rorysdad,

If the penalties relate to the 2010/11 tax year then if you can find a way to pay it pay it otherwise it will get to £1,300 before you know it and will not be able to be waived!

rorysdad

Thanks for the replies. I have not completed the self assessment forms as I was PAYE in the case of each one that they have levied penalties on.

Surely they know that? My employer deducted tax and I have payslips to prove that.

I spoke to HMRC on 18 April 2012 and told them the above. I subsequently had a letter from them stating that 'you no longer need to be in self assessment and we do not need you to fill in a tax return for the year ended 5 April 2011'.

So, I still have to pay penalties for previous years?

RD

jennifernil

I can see that you are digging your heels in here!

Just because you are in PAYE it does not necessarily mean your tax is correct. If you are asked to complete a SA then you should do so, so I would think they are still looking for the older ones.

If your tax affairs are simple then filling in the SA takes only minutes. Once you have done one, the rest will be easier.

If you do not have any tax to pay for previous years, then the penalties will be zero.

Why not ring them again and get it cleared up? Ask them if they still require SAs for previous years, you will not get a definitive answer here.

bartnwood

rorysdad wrote: »

Thanks for the replies. I have not completed the self assessment forms as I was PAYE in the case of each one that they have levied penalties on.

Surely they know that? My employer deducted tax and I have payslips to prove that.

I spoke to HMRC on 18 April 2012 and told them the above. I subsequently had a letter from them stating that 'you no longer need to be in self assessment and we do not need you to fill in a tax return for the year ended 5 April 2011'.

So, I still have to pay penalties for previous years?

RD

Hello rorysdad,

Unfortunately yes, if you have been issued with self assessment returns for previous years you have to file them.

You have mentioned in your original post that you were a Director of a Company. One of the requirements from HMRC is that you have to file a return if you are a Director of a Company.

From what you have specified I am assuming that these penalties relate to the tax years 2009/10 and earlier. If so then any penalties incurred will be waived if your tax liability once calculated for each tax year is zero.

Presently there is a scheme offered by HMRC called the Tax Return Initiative (TRI) where penalties can be reduced by up to 100% if there is a tax liability but all outstanding tax returns must be filed and any tax owing paid by 02 October 2012.

I would advise you seek professional advice as a good Accountant will keep your penalties to an absolute minimum if not zero

jennifernil

That sounds like very good advice/information.