If you do not file a return, HMRC can decide what you owe, and you cannot appeal it. A determination under s28C TMA 1970 has effect as if it were your own self-assessment, is fully enforceable, and can only be displaced one way: by filing the actual return, within a window that eventually closes for good.
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What a Determination Is
Where HMRC has issued a notice to file a self-assessment return under s8 or s8A TMA 1970 and the return is not delivered, HMRC does not have to wait. Section 28C of the Taxes Management Act 1970 allows an officer to determine, to the best of their information and belief, the amount of tax due. For companies, the equivalent power is a determination under paragraph 36 of Schedule 18 to the Finance Act 1998.
A determination has effect as if it were a self-assessment made by the taxpayer. It is enforceable in the same way, carries interest, and can be the foundation of enforcement action: distraint, county court proceedings, a statutory demand, a winding-up petition, or Direct Recovery of Debts from a bank account.
Why Determinations Catch People Out
Three features combine to produce the most common disaster in this area.
- They are deliberately generous to HMRC. A determination is made to the best of the officer’s information and belief, from whatever data HMRC holds: previous years, employer submissions, Land Registry and letting platform data, bank interest reports, the Connect system. Where information is thin, determinations are frequently far higher than the true liability.
- People assume they can argue about them. Taxpayers write letters disputing the figure, and get nowhere, because there is nothing to appeal. Months pass. Meanwhile interest runs and enforcement escalates.
- There is a hard deadline to displace them, and it is easy to miss.
The Deadline to Displace a Determination
A determination can only be superseded by a return delivered within the period allowed by s28C(5) TMA 1970. In broad terms the return must be filed within three years of the filing date for the year in question, or within twelve months of the date of the determination, whichever is later.
If the deadline passes without the return being filed, the determination stands as the taxpayer’s liability, whatever the true figure would have been. At that point the options narrow sharply, and none of them is straightforward.
What to Do When a Determination Arrives
- Do not write a letter of appeal. There is nothing to appeal. Time spent corresponding is time lost from the only remedy that works.
- Calculate the deadline under both limbs of s28C(5), and diarise the later date.
- Establish whether the notice to file was validly given. A determination depends on a valid s8 notice. If no notice was properly served, or was sent to an address HMRC knew to be wrong, the foundation may be defective. This is a public law point, not an appeal.
- Reconstruct the records and file the return. This is the remedy. Even an imperfect return based on reasonable estimates, clearly flagged as such in the white space, is far better than no return at all.
- Deal with the penalties separately. The determination and the late filing penalties are different things with different rules. The penalties can be appealed, and reasonable excuse under Perrin v HMRC is available.
- Address collection in the meantime. The determined sum is due and enforceable while you prepare the return. Consider a Time to Pay arrangement to hold enforcement off.
If the Deadline Has Passed
The position is difficult but not always hopeless. The available routes are:
- Challenge the validity of the s8 notice. If the taxpayer was never validly required to file, the determination has no foundation. Evidence about what address HMRC used and what it knew is central.
- Special relief. Schedule 1AB TMA 1970 contains a limited relief where it would be unconscionable for HMRC to seek to recover the amount, the taxpayer’s affairs are otherwise up to date, and no previous claim has been made. It is a narrow and demanding test, and HMRC applies it restrictively, but it is the principal route where a determination has become final and is grossly excessive.
- Judicial review. Available only for a public law failing (conspicuous unfairness, abuse of power, a decision no reasonable officer could have made), and subject to the three-month promptness requirement. Rarely the right answer, but occasionally the only one.
- Insolvency-side arguments. Where the determination has become the basis of a statutory demand or petition, the insolvency court will generally not go behind a final determination, as our guide to bankruptcy annulment explains. The tax point has to be resolved in the tax forum.
Determinations Compared With Other HMRC Estimates
| Mechanism | When used | Appealable? | How to displace |
|---|---|---|---|
| Determination (s28C TMA 1970) | No return filed after a valid notice | No | File the return within the s28C(5) window |
| Discovery assessment (s29 TMA 1970) | Insufficiency found after the enquiry window closed | Yes | Appeal; s29(5); time limits |
| Closure notice amendment (s28A TMA 1970) | Conclusion of an enquiry | Yes | Appeal |
| VAT best judgment assessment (s73 VATA 1994) | Records incomplete or unreliable | Yes | Appeal; see Van Boeckel |
| Corporation tax determination (Sch 18 para 36 FA 1998) | No company tax return filed | No | File the return within the statutory window |
The Penalties That Come With It
A determination almost always arrives alongside late filing penalties under Schedule 55 FA 2009: an initial fixed penalty, daily penalties, and further penalties at six and twelve months, with the later penalties calculated by reference to the liability. Those penalties are appealable, and reasonable excuse is available.
Two practical points follow. First, appeal the penalties within 30 days even while you are working on the return. The deadlines are separate. Second, filing the return may reduce the tax-geared penalties, because they are calculated on the liability shown, so the two workstreams support each other.
Preventing the Problem
- File something, even if imperfect. A return with clearly-flagged provisional figures, amended later, is far safer than a determination. Use the white space to explain what is provisional and why, which, following HMRC v Tooth, also protects against later allegations of deliberate inaccuracy.
- Keep the address up to date. A large proportion of determination cases begin with notices sent to an address the taxpayer has left.
- Deal with dormant or ceased sources properly. If a taxpayer no longer needs to file, ask HMRC to withdraw the notice to file under s8B TMA 1970 rather than simply ignoring it.
- Open the post. Determinations are frequently discovered only when enforcement begins, by which time the displacement window may have closed.
Frequently Asked Questions
Can I appeal an HMRC determination?
No. There is no right of appeal against a determination under s28C TMA 1970, and no reasonable excuse defence. The only way to displace it is to file the actual self-assessment return within the period allowed by s28C(5). Correspondence disputing the figure achieves nothing and wastes the time available.
How long do I have to file the return and displace it?
Broadly, the return must be delivered within three years of the filing date for the year in question, or within twelve months of the date of the determination, whichever is later. The two limbs run from different dates, so calculate both and diarise the later one. If the window closes, the determination stands as your liability.
The determination is far higher than what I actually owe. What can I do?
File the return. That is the remedy, and it works, the return supersedes the determination. Reconstruct the records as best you can and use reasonable, clearly-flagged estimates where necessary rather than filing nothing. If the displacement window has already closed, the remaining routes are challenging the validity of the notice to file, a special relief claim under Schedule 1AB TMA 1970, or judicial review.
What is special relief?
A limited relief in Schedule 1AB TMA 1970 available where it would be unconscionable for HMRC to seek to recover the amount, the taxpayer’s affairs are otherwise up to date, and no previous claim has been made. It is the principal route where a determination has become final and is grossly excessive, but the test is narrow and HMRC applies it restrictively. Evidence of the true liability and of why the return was not filed is essential.
Can I appeal the penalties that came with the determination?
Yes. The determination and the late filing penalties under Schedule 55 FA 2009 are separate, with separate rules. The penalties are appealable and reasonable excuse is available, applying the four-stage approach in Perrin v HMRC [2018] UKUT 156 (TCC). Appeal within 30 days even while you are still working on the return, and note that filing the return may also reduce the tax-geared penalties.