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Where Taxpayers and Advisers Meet

Failure to notify Sch 41 Finance act 2008

Posts: 103
Joined: Wed Jun 24, 2009 11:58 am

Failure to notify Sch 41 Finance act 2008

Postby simpsonite » Wed Aug 03, 2016 12:17 pm

Hi All,

My client has an ongoing investigation into 6 tax years to 2014 that were not submitted.

I have now completed the 6 years in question & HMRC have agreed the tax liability for the two years to 2014. The enquiry regarding the earlier 4 years will commence as soon as I agree or not the penalty calculations regarding the two years to 2014 tax year.

HMRC have sent out a penalty calculation summary ' failure to notify under schedule 41 Finance Act 2008'.

Their penalty range is between 35% minimum to 98% maximum of the agreed tax liability.

Their Penalty calculation for 2013 has been calculated at 35.7% of the agreed tax bill so a penalty notice calculation of £2598.58.

Their Penalty calculation for 2014 has been calculated at 35.7% of the agreed tax bill so a penalty notice calculation of £ 2492.44.

With tax liabilities for the earlier 4 years yet to be agreed & with penalty notices on top; there is going to be a significant bill due to HMRC!

Other than my client providing reasonable excuse for not submitting these returns on time. Do I have any grounds to appeal or argue down these penalty calculations?!

Thoughts appreciated


Posts: 3200
Joined: Sat Feb 01, 2014 3:26 pm

Re: Failure to notify Sch 41 Finance act 2008

Postby bd6759 » Wed Aug 03, 2016 5:23 pm

These figures don't look right,

For a deliberate failure, the penalty is between 35% and 70%. If you do not get the maximum reduction, HMRC move in points of 5%. A 95% reduction would give a penalty of 36.75%. If it was deliberate and concealed the range is 50% to 100%.

"Reasonable excuse" cannot apply to a deliberate failure.

The minimum penalty is 35%. HMRC cannot go below that except where they have discretion in special or unusual circumstances. This is usually applied when folliwing statute would give an unusual or unintended result.

It is also very unusual for HMRC to agree penalties for 2 years before the full extent of the evasion is known. Normally the liability is worked out before penalties are calculated. Also worth noting that sch 41 only applies to 2010-11 onwards. s7 TMA applies to the earlier years (Max 100%, no minimum)

Your client would be well advised to appoint someone who understands these things if there is a significant amount at stake.

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