What is a determination?

Produced by Tolley in association with Philip Rutherford

The following Owner-Managed Businesses guidance note Produced by Tolley in association with Philip Rutherford provides comprehensive and up to date tax information covering:

  • What is a determination?
  • When is a determination used?
  • Companies
  • Individuals and trustees
  • Quantum of the determination
  • Time limits for HMRC to make a determination
  • Effect of a determination
  • How can a determination be displaced?
  • Special relief
  • Displacement of determination
  • More...

What is a determination?

Determinations are issued by HMRC where a taxpayer fails to file a tax return. For example, a determination can be raised against an individual for failure to file a self assessment return (SA100) or against a company for failure to file a corporate tax self assessment return (CT600).

The determination is based on an HMRC estimate of the amount of tax due. In arriving at an estimate, HMRC will take into account the information that is available to it. For example, HMRC may consider comparable businesses or corporate information.

Unless the determination is superseded by a self assessment, it has effect for the purposes of payment of tax, collection and interest on unpaid tax as if it were a self assessment. This means that the due date for payment is the date which would have applied if the return and self assessment had been delivered by the filing date. Issuing a determination also gives HMRC the opportunity to commence formal proceedings for the recovery of the late paid tax.

There is no appeal procedure relating to determinations. Once they are raised the taxpayer or the company either needs to accept the determination, and pay the tax shown on the determination, or file a tax return. A determination can only be superseded by an actual self assessment return within the required time limits which are discussed below.

It is obviously not good practice to fail to file a tax return, but it should also be noted that in practice HMRC may often overestimate the amount of tax owed. While the determination is based on HMRC’s best estimate, HMRC is unlikely to be aware of all of the reliefs available to a taxpayer. Taxpayers should also seek to bring their filings up to date as it also ensures that all available claims and elections are made.

The key legislation for CTSA is found at FA 1998, Sch 18, para 36.

The key legislation for ITSA is found at TMA

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