Tax question - just been fined by HMRC

growse

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growse

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One for the tax / accountancy experts (there must be some out there somewhere...). :)

I've just received a fine of £100 from HMRC for not returning a tax return for year ending April 2008. I'm not sure why this is the case and would appreciate if someone could give me any indication about whether I've screwed up, or whether the government have screwed up.

Some background:

For the second half of 2006, I spent six months (181 days) working in the US. This was a placement working for the same (UK-based) employer. I was still paid in the same way, and in GBP. At the time, the company appointed Deloitte to sort out my tax return, as they seemed to think that it'd be necessary for me to do one for the 2006-7 tax year. Apparently a lot of people who do these sorts of placements go away across the 5th April divide, so the taxman gets a bit confused. For me though, it was apparently simple, seeing as I stayed in the US for less time than was needed to trip the residency criteria for both the UK and the US. I paid the correct amount of tax via PAYE as usual and my tax return (drawn up by deloitte) had a satisfying £0.00 at the bottom of it. This was submitted and I heard no more about it.

Since then, I've worked for the same employer entirely in the UK with no other incoming, paying tax via PAYE. I have a P60 form for the tax year ending 5th April 2008 and another for 5th April 2009. However, I've just got a letter saying that I'm being charged a £100 penalty for late return of my 2007-8 tax return.

Questions:
1) Should I have done a return for 2008?
2) Does having a valid P60 for that year negate the need for me to have done a return?
3) If they've fined me in error, how easy will it be convincing them of that?

Appreciate that there's probably not too many details to go on, but some general gist of whether I'm being an idiot or not would be hugely helpful before I phone someone up.

Thanks :)
 
Write to HMRC saying your employment abroad ended at X date and thus no returns were due, since you worked in the UK paying via PAYE from then on. Attach P60s as evidence.
 
1st off - if they think you owe them £100 for a late return you are better off paying it then sorting out the mess and getting a refund, If you don't they will charge you a further £100 for non payment of the first £100 after a few months and the whole thing starts to spiral out of control.

They are pretty quick and efficient at returning money to you, so long as you claim it back - they don't make much effort to return overpaid tax if you don't chase.

2nd off - Did they send you a tax return. Did you fill it in. If they did and you didn't then you are at fault, those things are NOT optional.

3rd off - If they sent you a tax return expect to get one every year for years to come unless you can persuade them otherwise.

NB: I am a victim of the tax system and not in any way a specialist.
 
If you had no income bar employment and bank interest then you needn't have done a return. They probably sent you a notice to file a return soon after the year end in april and it wasn't corrected then, so they'll have you down as due to file.

Where penalties are issued, there are reduced to tax outstanding at the due date. If no tax was outstanding, as it shouldn't have been, then the penalties will be corrected to nil. I wouldn't pay - just call and explain and it should get cancelled.

Btw a p60 proves nothing except how much income you had from one employment and what tax you paid. You could have had any number of other sources of income that would necessitate doing a return. Just tell them your only source of income had tax deducted at source - that should suffice.
 
Thanks for the advice everyone.

I've not received anything from HMRC after I filed my 2006-7 return. I wasn't notified either by deloitte or by HMRC that I needed to do one for ye2008. I'll give them a call tomorrow and see what they say.
 
Yeah don't pay, they can't issue you a £100 fine if as you say there is no outstanding tax liability. Once they've been informed it will be corrected and reduced to nil.

Also for example if you did have a £5 outstanding liability the max they could fine you for a late return would be £5.
 
vonhelmet said:
If you had no income bar employment and bank interest then you needn't have done a return. They probably sent you a notice to file a return soon after the year end in april and it wasn't corrected then, so they'll have you down as due to file.

Where penalties are issued, there are reduced to tax outstanding at the due date. If no tax was outstanding, as it shouldn't have been, then the penalties will be corrected to nil. I wouldn't pay - just call and explain and it should get cancelled.

Btw a p60 proves nothing except how much income you had from one employment and what tax you paid. You could have had any number of other sources of income that would necessitate doing a return. Just tell them your only source of income had tax deducted at source - that should suffice.
Click to expand...

HMRC can deem that you must fill in a tax return even if you have no income bar employment.
 
growse said:
I would expect them to bother telling me this though?
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yes, normally they would send you a letter informing you of this decision, and you should be getting notices to file a tax return each year (I do as I fill out a SA return).

Only thing I can think of would be if Deloitte were your nominated agent for dealing with HMRC and they got sent the notice to fill in a tax return - not sure if that's how it happens though, anyone more qualified than me know that answer to that? Best bet would be to phone HMRC sharpish first thing monday and try and get to the bottom of things - if it looks like it'll take a while to sort out, pay the £100 as others have said to avoid it escalating.
 
Ordinarily deloitte would get a copy of a notice to file and you'd get the original. It could have slipped through the cracks though.

Also, I'm not sure why they'd ask you to do a return if you only had employment income as they'd already have the employer equivalent of your p60. They'd be wasting their own time, surely. Besides even if they did expect a return, the penalty would still be reduced to nil, as mentioned above.
 
If you've been self employed and cease to be, you still have to do a return the next year. I don't know what your supposed to put, but even when your in normal employment the year after you still need to do one iirc.

You may have to do them for three years after, but I'm really not sure on that. I'll find out though.

Is the letter from the 'Default Surcharge Team' or Debt Management?
 
Clearly HMRC systems think you should have done a tax return. Usually you will have letters and a form sent to you.

I always get reminders closer to the time, just a letter pointing out that a deadline is approaching and that i must send a return to them.

Its odd if you have had no such letters, and assuming you have not moved address this would suggest a mess up somewhere. All i can think is that the letters were somehow sent to the company doing your taxes and they have ignored it.

A quick phone to the tax office should get to the bottom of it.

As someone else has said, if they dont immediately agree and cancel the fine then pay it ASAP and then get it back later. If there is one organisation you dont want debts with its HMRC :p
 
You will have been sent a tax return to complete, or a notice to file informing you that you need to complete a return. If you hadn't been issued with either, HMRC wouldn't have fined you for not filing a tax return. Remember that it is your responsibility to inform HMRC if you move. Not getting the return/notice because you haven't told HMRC your new address is not accepted as a reason for you not filing a return.

Once HMRC issue you with a return or notice to file, you have to comply with it, regardless of why you think you don't have to.

You can appeal against penalties, and tell HMRC why you think you have a 'reasonable excuse' for not filing your return on time (note the 'on time', not 'not filing'). If you haven't filed a return, they will not even entertain your appeal, and will send you a letter informing you that in their opinion you have no reasonable excuse.

The best thing for you to do is file a return. Go to hmrc.gov.uk and print one off and fill it in, or register and file online for the year ended 5 April 2008. As you don't expect to have any liability the penalty (or penalties) charged will be reduced to nil. If you do have any tax iability then the penalty will be reduced to match the liability if less that the amount of the penalties.

You wil most likely have been issued a return or notice to file for 2008-09 as well, so check with them what still needs to be completed. If you do need to complete a return for 2008-09, get this in soon as you can and ask for your self assessment record to be closed so that you don't get returns in the future.

Biohazard - You have been misinformed. If you cease self employment and fill in the right box on the return then that should be your last return. You don't have to carry on completing them (unless there is something else that means you have to).
 
What I want to know is why they're only know issuing a 100 quid penalty for your 08 return. That should have been filed by the end of january 09 and the penalty would have been issued straightaway. Why are you only now hearing about it?
 
vonhelmet said:
What I want to know is why they're only know issuing a 100 quid penalty for your 08 return. That should have been filed by the end of january 09 and the penalty would have been issued straightaway. Why are you only now hearing about it?
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Number of possibilities.
1 - Return was issued 'late' so dates penalties charged is moved forward.
2 - It's the 2nd penalty, and got delayed somwhere along the line, or has been ignored for a while

but, most likely

3 - growse moved, didn't tell HMRC of new address. They finally get told, and then issue the penalty notice that should have been issued ages ago, but wasn't as they didn't know where he lived.
 
Phone them up. There should be a number on their letter.

They will tell you all you need to know about the penalty, why it was issued and how you can prove you don't need to pay it (if that is the case).
 
I've moved 5 times in the last 6 years, and never once told the HMRC. I was under the impression that my employer payroll (who I do inform - they send me payslips and P60s) kept HMRC up to date.

Just to confirm, if I download, complete and mail back a 2008 form showing no tax payable, does the penalty get cancelled? Penalty was issued by the "criminal and compliance unit". Erk.
 
Hmm same sort of thing has happened to my father. He has been telling them he told his company for years and no longer employs anyone. They still have him on file as having people on his books... they sent him a fine a few weeks ago even though he has records of the problem going back years and him trying to resolve it.

Looks like its court time for HMRC :D They shall be destroyed.
 
chippie said:
Biohazard - You have been misinformed. If you cease self employment and fill in the right box on the return then that should be your last return. You don't have to carry on completing them (unless there is something else that means you have to).
Click to expand...

My father's been self employed in two different fields, and know workmen who have had to do similar. They do have to, somehow. I'm not completely versed in all public notices and Tolley's across fields. I doubt a lot of HMRC are.

I worked next to a default surcharge team - good luck in your appeal :p they are harsh.
 
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