HMRC deadlines – The importance of keeping good time

Deadlines are fundamental to how HMRC operates, so you should expect that almost every correspondence received from HMRC will have a deadline for response or action.

Although many deadlines are flexible, and either allow for extensions or late action without consequence, HMRC is becoming far more rigid, particularly in terms of deadlines which are governed by legislation. Therefore, it is important to be mindful of deadlines and the potential consequences of failing to comply.

‘Informal’ deadlines – those not governed by legislation

Usually, ‘informal’ deadlines are imposed in relation to providing a response to a request for information or documents. These are most common at the beginning of a compliance check or dialogue with HMRC. Although HMRC has a wealth of powers available to enforce action from a taxpayer, HMRC will usually encourage the taxpayer to comply voluntarily without the use of these powers in the first instance.
‘Informal’ deadlines are set to mitigate delay and continue progress towards a conclusion. These deadlines can usually be extended within reason if needed. The result of missing an ‘informal’ deadline is that HMRC is likely to impose a ‘formal’ deadline to progress the matter. One thing to note, however, is that HMRC may take account of any delays when considering penalties, if it turns out there have been errors in a tax return.

‘Formal’ deadlines – those governed by legislation

HMRC’s ‘formal’ deadlines are most common in more advanced exchanges, either where the taxpayer has not been complying with ‘informal’ deadlines for information to be provided, or if it is in relation to a final decision made by HMRC. Matters which usually involve the need to meet a formal deadline include:

• Responding to a Schedule 36 information requestAppealing a decision by HMRC
• Accepting an offer of a review
• Notifying an appeal to the tribunal
• You should never ignore a deadline set by HMRC, irrespective of whether it is ‘informal’ or ‘formal’.However, every effort should be made to ensure ‘formal’ deadlines are identified and met.

Deadlines to appeal a decision

When HMRC makes a formal decision or information demand, it issues a letter which usually outlines the legislation that gives it the power to make the decision or demand. This may be for one of the following:

– To close an enquiry and put an amount of tax in charge.
– To raise an assessment for tax in relation to a year.
– To request information and records.

The letter will also give a period within which to write to HMRC (or in some instances the Tribunal) to appeal and explain why you disagree with HMRC’s decision. This deadline is usually 30 days from the date of the notice; however, it can sometimes be less.

The consequence of not filing an appeal before the deadline is that your only recourse is to submit a late appeal, or agree with the decision. To submit a late appeal, you must provide a reasonable excuse for why the appeal was not filed before the deadline. Not understanding the legislation is not recognised as a reasonable excuse.

Critically, in the first instance, it is at HMRC’s discretion as to whether a reasonable excuse exists, and we are more frequently seeing that HMRC is unwilling to accept that there is reasonable excuse and it is therefore refusing a late appeal. If HMRC does not allow a late appeal, then the only option left is to go to the tribunal to seek permission for a late appeal to be admitted and thereby enter the litigation process. This can be time-consuming and expensive, with no guarantee of success.

Reviews of HMRC’s decisions

We have seen many cases where HMRC has argued that a matter had become final because a review was not accepted. Indeed, that is the way the law works, but it gets missed by many.

For example, HMRC issues an income tax assessment for a year because of an error identified. The taxpayer appeals that decision within the required 30 days and provides further arguments. So far so good.

HMRC then responds, reiterating its view that there is tax to pay. HMRC also offers a review of its decision and gives a deadline of 30 days to accept the offer of a review. If that offer of a review is not accepted within 30 days, or the appeal notified to the Tribunal, then the legislation states that HMRC’s view becomes final.

Many people miss this, thinking that their appeal has been submitted so that matter is still ‘live’. Once again, if the deadline is missed, there will be the added challenge of getting a late request for review, or a late notification of appeal, accepted.

Further, if HMRC concludes in their review that their original conclusion was correct, there will be a deadline of 30 days to notify an appeal to the Tribunal, or once again HMRC’s view will become final. Often this deadline is also missed.

Late Appeals

It is possible to get late appeals accepted, but it is better to avoid the issue in the first place, where possible. However, over the years we have managed to convince HMRC to accept late appeals in many cases. It can be difficult to argue, but by making sure that all relevant facts are properly considered, it is possible. Sometimes it may be necessary to have the question of whether a late appeal should be  considered by the Tribunal.

If you receive a notice from HMRC which sets a deadline to appeal and you are not sure what to do next, or what your options are, you should seek professional advice before the deadline expires. If you are late with an appeal, you may still be able to pursue the matter with the right support. At inTAX Limited, we have many years of experience successfully appealing decisions and can ensure that your position is protected and that you have the best possible outcome.

You can get in touch with our friendly and experienced team on: 0203 675 8122 or email liam.chalmers@intaxltd.com.