COM10107 - Appeals: handling appeals and postponements: flat-rate penalty determination appeals - reviewer (Action Guide)

This Action Guide supplements the COM100060 action guide. You can find further technical guidance on reviews in the Appeals Reviews and Tribunals Guidance (ARTG) manual at ARTG4010 onwards.

Where a request for a review has been made following an appeal against a flat-rate penalty determination follow steps 1 - 17 below. The guide is presented as follows.

Action Steps
Initial action Steps 1 - 3
Review appeal in line with ‘reasonable excuse’ criteria Step 4
Decision favourable to company Step 5
Decision not favourable to company Steps 6 - 8
Review not concluded within 45 days, or other agreed timescale Step 9
Notification received from the Clearing House of an appeal to the Tribunal Steps 10 - 15
Election for oral hearing Steps 16 - 17

Initial action

1. HMRC has offered a review. If a request for review has been received directly by the Review Unit following an offer of review, on the day of receipt:

  • acknowledge request
  • record the case on any local case management system
  • use function NOTE (Case Notes) to note receipt of the request for review
  • request the file or papers from the decision maker
  • B/F for five to seven days to ensure relevant papers are received
  • when the file or papers are received, pass to the review officer.

2. If the request for review was received at a local office and the request and the papers have been referred onto the Review Unit:

  • check the papers to see that an acknowledgement has already been sent by the decision maker. If not, send an acknowledgement
  • record the case on any local case management system
  • pass the request and papers to the review officer
  • use function NOTE to show what you have done.

3. The company has asked for a review before one is offered by HMRC. The company can ask for a review at any time after they have appealed to HMRC, see ARTG2210.

The decision maker must write to the company within 30 days or other reasonable time, setting out our view of the matter. As soon as this has been done, the review time limit begins. The decision maker should send the relevant papers to the Business Review Unit. See step 3 of the COM10106 action guide.

Review appeal in line with ‘reasonable excuse’ criteria

4. See COM100100 and ‘reasonable excuse’ at ARTG2250.

Where a review has been offered by HMRC, the time limit within which to notify the review conclusion is 45 days from the date that HMRC receives the review acceptance, unless a different period is agreed with the company. See ARTG4030.

Where a review has been requested by the company, the time limit is 45 days from the date that HMRC send their latest view of the matter. See ARTG2210.

In the exceptional event that more time is needed, this should be requested as soon as possible. See ARTG4690 for further guidance.

The review conclusion letters SA637, SA638 and SA640 must be sent to the company, with a copy to the agent if applicable. This applies even if the appeal was made by the agent on the behalf of their client.

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Decision favourable to company

5. Within 45 days of receipt of review request, or other agreed period if different, take the following steps.

  • Issue letter SA637 to the company and a copy to the agent where applicable.
  • Use function PPEN (Prepare Penalty Determination) to cancel the penalty or penalties. Doing that also clears any appeal signal.
  • Update any local case management system.
  • File the papers at the Review Unit.
  • Use function NOTE to show what you have done, the grounds of appeal and the location of the papers in the Review Unit.
  • If the review conclusion letter SA637 cannot be sent within 45 days, or any longer period previously agreed, you should contact the company to seek an extension of the review period. If an extension is agreed, take all the above steps to conclude the appeal.
  • If the company does not agree an extension, go to step 9.

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Decision not favourable to company

6. Within 45 days of receipt of review request, or other agreed period if different, take the following action.

  • Send a review conclusion letter SA638 to the company and a copy to the agent where applicable, setting out the reasons why you are unable to accept that there is a reasonable excuse. This letter sets out the taxpayer’s options to either accept the decision or to send their appeal to the Tribunal and explains that the case will be closed if the company takes no action within 30 days.
  • Ask for the return to be filed or payment of the tax due made if still outstanding.
  • Update any local case management system.
  • Use function NOTE to show what you have done and the location of the papers.
  • B/F for 45 days, then follow steps 7 or 8.

7. If the company accepts the decision:

  • use function HAPP (Handle Appeal) to change the appeal status to ‘by agreement’, to automatically release any amounts stood over for collection without issuing a notice of appeal determination
  • file the papers at the Review Unit
  • use function NOTE to show what you have done and the location of the papers
  • update any local case management system
  • send a letter to the company determining the appeal under S54 TMA 1970.

8. If there is no response received in the Review Unit after 45 days, check to see if the appeal has been sent to the Tribunals Service using any locally agreed process between the Clearing House and the Review Unit, see ARTG8320.

If so, take no further action regarding the penalty and go to step 10.

If not:

  • issue letter SA639, review officer’s deemed determination of appeal, to the company
  • use function HAPP (Handle Appeal) to change the appeal status to ‘by determination’ to automatically release any amounts stood over for collection, without issuing a notice of appeal determination
  • file the papers at the Review Unit
  • use function NOTE to show what you have done and the location of the papers
  • update any local case management system.

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Review not concluded within 45 days, or other agreed timescale {#}

9. If the review conclusion letter cannot be sent within 45 days, or any longer period previously agreed, see ARTG4850 and consider whether it is appropriate to seek an extension to the review period. It would be appropriate to do this if you wanted to accept the appeal. See step 5.

If further time is not agreed, the decision is treated as upheld and we must notify the company.

  • Issue letter SA 640 to the company and a copy to the agent if applicable.
  • Use function NOTE to show what you have done and the location of the papers.
  • Update any local case management system.
  • B/F for 45 days, then follow steps 7 or 8.

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Notification received from the Clearing House of an appeal to the Tribunal

10. The case is normally decided by a paper hearing with no attendance by HMRC.

If an oral hearing has been requested by the company, go to step 16.

There is a time limit; HMRC must send a statement of their case to the Tribunals Service and a copy to the company within 42 days from receiving a copy of the notice of appeal to the Tribunal.

Further technical guidance on appeals to the Tribunal for any circumstances not covered in this guide is at ARTG8200 onwards.

If you decide not to defend this appeal at any time after a notification has been received from the Clearing House of an appeal to the Tribunal:

  • contact the Tribunals Service immediately to advise that the appeal is not to be defended, and inform the company in writing. These would be exceptional circumstances, such as new information or change of opinion regarding reasonable excuse
  • follow step 5, decision favourable to the company, but do not issue the SA 637 letter. Issue a separate letter advising the company of the situation.

In all other cases, take the following steps.

11. Has an appeal to HMRC been received?

  • If so, go to step 12.
  • If not, see ARTG8230 and contact the company to check what they want to do. Explain that they must appeal to HMRC before it can be heard by the Tribunal.

If the conclusion is to accept the appeal to the Tribunal as also being an appeal to HMRC, go to step 13 and deal with the appeal as if it were a direct appeal to Tribunal made at same time as appeal to HMRC.

12. Is there an ongoing review?

  • If not, go to step 13.
  • If so, inform the Tribunals Service that a review is ongoing. See ARTG4640 for action after review is concluded.

13. Has the appeal to the Tribunal been made following a decision maker’s letter SA633 or review conclusion letter SA 638 or SA 640?

  • If so, go to step 14.
  • If not, consider grounds of appeal under reasonable excuse criteria for direct appeals sent to the Tribunal at the same time as the appeal to HMRC, or treated as such from step 11.

If you decide that reasonable excuse tests are met:

  • follow step 5 but donotissue letter SA637
  • issue a separate notification to the company that the appeal is accepted
  • inform the Tribunals Service that the appeal is not to be defended.

If you decide that reasonable excuse tests are not met and that the appeal should proceed to the Tribunal, go to step 14.

14. If an appeal was made to HMRC at the same time as the appeal was sent to the Tribunal and we have already upheld the penalty:

  • complete a ‘Paper Hearing Submission’ form SA 641, within the time limit for completing and submitting the form to the Tribunals Service of 42 days from the date that notification of the appeal was received
  • send the SA641 and required documents to the Tribunals Service within the time limit
  • send a copy of SA641 and documents to the company
  • update any local case management system
  • use function NOTE to show what you have done.

15. Notification received from Ministry of Justice (MoJ) of decision.

If the decision is favourable to the company, follow step 5 but do notissue SA637 letter.

If the decision is favourable to HMRC:

  • use function HAPP (Handle Appeal) to change the appeal status to ‘by determination’ to automatically release any amounts stood over for collection, without issuing a notice of appeal determination
  • file the papers at the Review Unit
  • use function NOTE to show what you have done and the location of the papers
  • send a letter to the company to advise of the Tribunal decision and that the penalty is now payable.

In all cases:

  • close the case on any local case management system
  • complete management information statistics as required
  • feedback to the decision maker if necessary.

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Election for oral hearing

16. If at any stage there is an election by the company for an oral hearing, complete the ‘Paper Hearing Submission’ form immediately and send it together with the complete file or papers to the Local Compliance or Appeals Unit contact with a covering memo indicating that this is an oral hearing request.

17. If HMRC wish to elect for an oral hearing in any default paper hearing case, you must seek permission from Central Policy Tax Administration Advice first through your line management. This normally only happens in exceptional circumstances.