HMRC letter

StevieB99

I received a letter from HMRC at the beginning of last year concerning a property I rented out. I had been ill for several years and did not fill any self assessments out.(it was the last thing on my mind-go easy on me please)
I went on the HMRC website and filled everything out and paid what was due. I gave my reasons for not declaring etc and they stated "We have accepted your reasonable excuse-there are no penalties to pay.'
I received a letter stating acceptance of my 'reasonable excuse' but the figures they sent were not correct. I replied with the correct figures. 
Now it took them 13 months to get back to me today stating they have reviewed the case and have decided that my 'reasonable excuse' may not be valid and it was a mistake! They have now gone back 7 years instead of the standard 4 plus interest up to today and whatever the penalty is that they decide on. They have sent me a demand for the additional funds.
They are asking for doctors reports and the missing years now.

Can anyone advise whether they can just change there mind like this? Seems a bit over top considering it took them 13 months to reply.
I must stress I have been cooperative the whole way through this. They are stating I don't have to reply and then they will make their own decision.
Any legal help please?

Thank you all in advance

veronikamoneva

Yeah, I didn't file self assessment in 2022 as just couldn't be bothered, but I could still back file it online in 2024 when viewing my calulations, if they added the penalty to my overall debt I owe them since 2007, I haven't even noticed. 

StevieB99

Just to comment that the figure has changed by £1000's not just a few pounds.

tacpot12

HMRC are allowed to change their mind if they make a mistake. At this stage they have only said it might be a mistake. They have to keep an open mind that you may have too ill to expect you to submit returns. 

I think the only thing you can do is to provide them with the evidence they seek. I think I would try to add an explanation as to why your illness meant that you couldn't turn the problem over to a professional or a friend or family member to do your tax return. (Usually if you can't do them youself, and you are aware that you need to do them, it is expected that you engage a professional to do so, especially if you have income that they can be paid from).

Hoenir

Undeclared tax is taken very seriously. Nor is 4 years standard. HMRC can assess back to when the non declaration commenced. Unless you were ill for the entire period. Then failure to declare the income from the start is likely to be treated as evasion. That may well incur payment of the tax due, penalties for non disclosure levied on the tax due plus interest. Not bothering to file self assessment returns is going to be an extremely costly misjudgement. Never been any different.  HRMC once engaged are like a Doberman with a bone. 

StevieB99

Hoenir said:

Undeclared tax is taken very seriously. Nor is 4 years standard. HMRC can assess back to when the non declaration commenced. Unless you were ill for the entire period. Then failure to declare the income from the start is likely to be treated as evasion. That may well incur payment of the tax due, penalties for non disclosure levied on the tax due plus interest. Not bothering to file self assessment returns is going to be an extremely costly misjudgement. Never been any different.  HRMC once engaged are like a Doberman with a bone. 

I was ill for the entire period hence the initial disclosure and acceptance but thank you for the response.

Olinda99

apologies for sounding harsh but being ill isn't and never has been a valid excuse 

they are professionals for example accountants who would file tax returns for you 

going 7 years without declaring your rental income will be viewed as tax evasion and will be treated quite harshly as you are finding out

the best you can hope for is paying back-tax with interest and penalties. if it goes badly for you then you could be looking at a criminal record.

did you just not engage with hmrc at all over the last 7 years or did you submit an annual self-assessment and declaration but omitting the rental income?

again apologies for sounding harsh - I could sugar coat it but that seems pointless

Hoenir

StevieB99 said:

Hoenir said:

Undeclared tax is taken very seriously. Nor is 4 years standard. HMRC can assess back to when the non declaration commenced. Unless you were ill for the entire period. Then failure to declare the income from the start is likely to be treated as evasion. That may well incur payment of the tax due, penalties for non disclosure levied on the tax due plus interest. Not bothering to file self assessment returns is going to be an extremely costly misjudgement. Never been any different.  HRMC once engaged are like a Doberman with a bone. 

I was ill for the entire period hence the initial disclosure and acceptance but thank you for the response.

There was always the option of employing an accountant. Who was running the property, handling the administration if you were incapacitated. Not wishing to sound harsh. But have experienced many people over the years who thought that they could get away without declaring income. Only to later find it comes to back to haunt them and the consequences of their actions. 

StevieB99

Hoenir said:

StevieB99 said:

Hoenir said:

Undeclared tax is taken very seriously. Nor is 4 years standard. HMRC can assess back to when the non declaration commenced. Unless you were ill for the entire period. Then failure to declare the income from the start is likely to be treated as evasion. That may well incur payment of the tax due, penalties for non disclosure levied on the tax due plus interest. Not bothering to file self assessment returns is going to be an extremely costly misjudgement. Never been any different.  HRMC once engaged are like a Doberman with a bone. 

I was ill for the entire period hence the initial disclosure and acceptance but thank you for the response.

There was always the option of employing an accountant. Who was running the property, handling the administration if you were incapacitated. Not wishing to sound harsh. But have experienced many people over the years who thought that they could get away without declaring income. Only to later find it comes to back to haunt them and the consequences of their actions. I

It's OK, just very annoying as I paid up and fessed up and now 13 months later to get a letter changing the goal post.

There are worse things in life to worry about:)

SonnyLumiere

There is a great deal of nonsense in some of these replies. Quotes are from HMRC's Compliance Handbook (CH).

Hoenir: "Nor is 4 years standard". HMRC: "The normal time limit of 4 years applies to all taxes." (Other limits may apply if the taxpayer's non-compliance is not "careless", e.g. deliberate)

Hoenir: "HMRC can assess back to when the non declaration commenced". As a general statement this is wrong. How far back HMRC can go depends on "behaviour" - see page CH56100 of CH manual.

Hoenir: "Then failure to declare the income from the start is likely to be treated as evasion". No, if the "behaviour" was deemed "careless" this is not treated as evasion.

Olinda: "if it goes badly for you then you could be looking at a criminal record." No! For this level of non-compliance, the result will be a contract settlement to cover tax due, plus penalty, plus interest. Such settlements (the vast majority) are civil not criminal. Olinda: If you don't understand how HMRC operate then please do not post such alarmist nonsense.
https://www.gov.uk/hmrc-internal-manuals/compliance-handbook/ch56100

mybestattempt

StevieB99 said:

I received a letter from HMRC at the beginning of last year concerning a property I rented out. I had been ill for several years and did not fill any self assessments out.(it was the last thing on my mind-go easy on me please)
I went on the HMRC website and filled everything out and paid what was due. I gave my reasons for not declaring etc and they stated "We have accepted your reasonable excuse-there are no penalties to pay.'
I received a letter stating acceptance of my 'reasonable excuse' but the figures they sent were not correct. I replied with the correct figures. 
Now it took them 13 months to get back to me today stating they have reviewed the case and have decided that my 'reasonable excuse' may not be valid and it was a mistake! They have now gone back 7 years instead of the standard 4 plus interest up to today and whatever the penalty is that they decide on. They have sent me a demand for the additional funds.
They are asking for doctors reports and the missing years now.

Can anyone advise whether they can just change there mind like this? Seems a bit over top considering it took them 13 months to reply.
I must stress I have been cooperative the whole way through this. They are stating I don't have to reply and then they will make their own decision.
Any legal help please?

Thank you all in advance

If you disagree with the tax and penalties HMRC have assessed the your legal recourse is to appeal each assessment you contend is incorrect.

Your rights of appeal will be set out clearly in each notice of assessment.

If you believe you have a reasonable excuse but HMRC do not, then you can take your appeal to Tribunal.