HMRC letter

EssexHebridean

Olinda99 said:

SonnyLumiere said:

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

I am surprised you say this. If (as I asked) the OP submitted incorrect SAs for 7 years (deliberately omitting rental.income) then this is tax fraud. 

HMRC have the option to prosecute if they want to send a message to the rental sector.

I would suggest you educate yourself by googling, but for example

https://aa-accountants.co.uk/consequences-of-not-declaring-rental-income/

you will also find examples of people being prosecuted for failing to declare rental income with some even being jailed (although to be fair this is for quite substantial amounts)

My BIB. Allowing that the OP stated very clearly that they had not submitted self assessment returns during the period of their illness, I'm not quite sure where you get your suggestion that they "deliberately" did anything as this appears to not be the case, from what we have been told. 

LHW99

OP look carefully to see how you can appeal. Get hold of the medical evidence of your illness, and respond to HMRC as swiftly as possible (or reply, explaining why, if there is a specific delay a full response is held up). Make the point (politely) that you had thought their original letter meant no further action, and that you had been pro-active in correcting their figures at the time (ie you are being co-operative)

HMRC have a duy to collect all tax due, as said above, but they are not unreasonable, they just want their due. Assuming you are up to date with the latest relevant tax year (are you?) then the whole aim is to make sure you have explained your issues fully to them, so that they can consider all the evidence on what happened in the past.

It may not change their new request, but it will ensure you get a fair hearing. If paying everything in one go would be difficult, you may (not certain) be able to arrange a payment scheme.

SonnyLumiere

LHW99: late appeals (esp on medical grounds) are in practice usually accepted.
https://www.gov.uk/hmrc-internal-manuals/appeals-reviews-and-tribunals-guidance/artg2240

Time To Pay (instalment arrangements) requests are also usually agreed, although you have to jump through a few hoops (evidence-wise). Anything longer than 12 months can get a bit trickier to obtain.

SonnyLumiere

For the avoidance of any doubt re criminal action:

According to the 2023-24 HMRC Annual Report "HMRC opened 311,000 compliance cases ..." and "HMRC’s criminal investigations resulted in 344 prosecutions in 2023-24".

https://www.gov.uk/government/publications/hmrc-annual-report-and-accounts-2023-to-2024

Yes, that's right, only 344 taxpayers were prosecuted in that year. The rest of the cases (the overwhelming majority) were dealt with by civil action, NOT criminal action.

mybestattempt

SonnyLumiere said:

LHW99: late appeals (esp on medical grounds) are in practice usually accepted.
https://www.gov.uk/hmrc-internal-manuals/appeals-reviews-and-tribunals-guidance/artg2240

Time To Pay (instalment arrangements) requests are also usually agreed, although you have to jump through a few hoops (evidence-wise). Anything longer than 12 months can get a bit trickier to obtain.

My understanding of the OP's situation was that HMRC currently intend to assess penalties for failure to notify chargeability to tax  because they do not accept his illness provides a reasonable excuse for that failure. They will be considering the time up to the point he remedied the failure.

A reasonable excuse for making a late appeal against a penalty assessment outside the statutory 30 days could only relate to the period from the end of those 30 days to the point he asks for a late appeal to be admitted.

There may be entirely different time periods and facts which are relevant to one "reasonable excuse" but not the other.

MysteryMe

To answer the OP's question, yes HMRC can revisit a decision. For example new information may have come to light which they just need to clarify with the OP. 

No one on this thread is aware of the full facts. Even the OP does not know what HMRC knows. No point anyone labouring the point on likely outcomes as outcomes will be based on the unknown specifics of the OP's case and as already pointed out, that's not really what this thread was about in any case

It's important that the OP continues to answer requests for further information fully and truthfully and speaks to their accountant if they are unsure on any aspect and hopefully the matter will be resolved without it being too detrimental to the OP. 

TripleH

Op, start getting the evidence that HMRC have requested. If you have any queries about what you need to provide, I suspect the letter you received should have the inspector dealing with your case's name on it.

Don't get bogged down in the details about how many years they can investigate etc (they can go back 20 years in serious cases) at this point it isn't relevant.

You need to deal with the request and provide the information requested. Also if you owe money, start paying it down especially for amounts you agree with HMRC on and argue the exact amounts later on.

You are more likely to be taken seriously as genuine if you are seen to try to fix this quickly plus it stops the amounts increasing further.

sheramber

HMRC  want to establish that your illness prevented you from declaring the income for the whole period  concerned and also that you declared the income as soon as your illness ended, generally within 14 days.

In that case there would probably be no penalty.

The fact that you voluntarily notified them and cooperate with any enquiries will be taken into consideration.  This is usually by a percentage reduction of any penalties calculated.