What happens if HMRC issues a determination instead of a tax return?

Understanding HMRC “determinations” in plain English

If you’re dealing with UK Self Assessment, you’ll usually think in terms of tax returns: you submit the figures, HMRC processes them, and a tax bill is calculated (or repaid) based on what you reported. But there’s another route HMRC can use when a return isn’t filed on time: a “determination”.

A determination is HMRC’s estimate of how much Income Tax and Class 4 National Insurance you owe for a tax year when you have not submitted a Self Assessment tax return by the deadline. It is, essentially, HMRC saying: “We haven’t received your return, but we believe you owe £X, and we’re going to treat that as payable.”

This can feel alarming because it’s not the usual process, and it often leads to an unexpectedly high figure. Understanding what a determination is, why it happens, what it means for your payments and penalties, and how you can put things right can make a huge difference—both to your stress levels and your eventual tax bill.

Why would HMRC issue a determination instead of processing a return?

HMRC typically issues a determination when you were required to file a Self Assessment return for a tax year and you did not submit it by the deadline. In other words, HMRC can’t calculate your liability in the normal way because they don’t have your numbers.

It’s important to note the wording here: HMRC doesn’t issue a determination because it prefers determinations; it issues a determination because the return isn’t there. If you file on time, you should generally expect a normal calculation based on your return (or an HMRC calculation if it applies). If you don’t file, HMRC may eventually step in with its own figure.

Common situations that lead to determinations include:

• You registered for Self Assessment but later stopped trading and assumed you didn’t need to file.

• You moved house and missed HMRC letters and reminders, so the deadline passed without you realising.

• You had personal difficulties, illness, or business disruption and filing slipped.

• You thought your accountant had filed, or your accountant thought you were handling it.

• You couldn’t access your online account in time and didn’t submit a paper return earlier in the year.

• You disputed that you needed to file at all, but didn’t resolve it with HMRC before the deadline.

Once HMRC considers the return outstanding and sufficiently late, a determination can be issued to protect the tax position and allow collection activity to begin.

What exactly is an HMRC determination?

A determination is a formal assessment raised by HMRC for a specific tax year where a Self Assessment return has not been delivered by the due date. It sets out an amount of tax (and often Class 4 National Insurance) that HMRC says is payable.

Think of it as an “estimated bill”. But it’s more than a casual estimate. It carries legal weight and can be enforced. HMRC can pursue the amount just as if it were based on an actual return—meaning they can request payment, charge interest, and potentially use debt collection processes.

Because it’s an estimate, it may not reflect your true liability. Sometimes it’s too high. Occasionally it’s too low (though many people only notice when it’s too high). Either way, it’s not a substitute for filing the return; it’s what HMRC uses when the return is missing.

How does HMRC decide the amount in a determination?

HMRC generally bases a determination on information it already holds or assumptions it considers reasonable. The details will vary depending on what data HMRC can see. For example, HMRC may have:

• PAYE income information from an employer or pension provider

• Details of bank interest reported by banks and building societies

• Dividend information in some circumstances

• Information from earlier tax years

• VAT returns or other business records (where relevant)

• Industry norms or risk-based estimates

But the key point is that a determination is made without your full facts and figures, because you haven’t provided them in a return. That’s one reason determinations can be inaccurate. If your profits fell, your business stopped, you had higher expenses, or you had losses to claim, HMRC won’t automatically know that.

Also, determinations often do not include reliefs or claims that you might have been entitled to. For example, you may be able to claim certain allowances, relief for pension contributions, gift aid, trading losses, or specific expenses—none of which will necessarily be reflected in HMRC’s estimate.

Determination vs. tax return: what’s the practical difference?

The practical differences are significant. With a tax return, you are declaring your actual income and allowable deductions, and HMRC’s system calculates the tax based on those declarations. With a determination, HMRC is asserting a figure in the absence of your declaration.

Here are the main day-to-day differences:

1) Control over the numbers

With a return, you control the numbers (within the law and evidence). With a determination, HMRC controls the numbers, and you may have to work hard to correct them.

2) Reliefs and claims

A return is where you claim many reliefs and allowances. A determination may ignore claims entirely because HMRC doesn’t know about them. So even if your true liability is low, the determination can be high.

3) Enforceability

Both a normal Self Assessment calculation and a determination can be enforced. But a determination tends to be a trigger for escalated collection action because HMRC may assume the taxpayer is disengaged or non-compliant.

4) The window to fix it

This is one of the most important differences: determinations come with time limits. If you file the missing return in time, it can replace the determination. If you miss that window, the determination can become effectively “locked in”, even if it’s wrong.

Does a determination replace penalties for late filing?

No. A determination does not remove the usual late filing penalties. If your return is late, late filing penalties can still apply. In fact, determinations often arrive after penalties have already started to accrue.

In Self Assessment, penalties can build over time when a return is not filed: an initial fixed penalty, followed by daily penalties in some cases, then further penalties at six months and twelve months (with amounts depending on the situation). The exact penalty position depends on the year and circumstances, and whether HMRC considers there is tax unpaid.

The key takeaway is that a determination is about establishing a tax bill in the absence of a return. It does not “wipe the slate clean” regarding filing obligations or penalties.

What about interest and late payment penalties?

Once a determination is raised, HMRC may treat that amount as due and payable. If it isn’t paid by the relevant due date (or by the date HMRC demands payment, depending on the circumstances), interest can accrue. Late payment penalties may also arise if the amount remains unpaid, again depending on the period and the rules in place for that tax year.

This is where the situation can snowball: a determination that is higher than your true liability can lead to payment demands that you can’t meet, which leads to interest and penalties, which then makes the overall debt even bigger.

Even if you believe the determination is wrong, ignoring it is usually the worst approach. It’s often better to act quickly: understand what HMRC has done, work out your true position, and take steps to replace or correct the determination by filing the missing return within the allowed timeframe.

Can you appeal an HMRC determination?

Many people assume they can appeal a determination in the same way they might appeal another HMRC decision. Determinations are unusual because the primary route to correct them is typically to file the outstanding return (within the permitted period) rather than relying on an appeal process about the amount.

That said, there may be limited scenarios where you challenge elements around the process, and you can certainly challenge associated penalties (for example, late filing penalties) if you have a reasonable excuse. But when it comes to the actual figure in the determination, the usual and most effective method is to submit the missing return and have it replace the determination—provided you do so in time.

If you are outside the time limit to replace the determination with a return, the options become more complex, and specialist advice is often necessary.

The critical time limit: when can a tax return replace a determination?

When HMRC issues a determination, it doesn’t mean “you can never file a return.” You usually can file the outstanding return after the deadline. But the crucial issue is whether HMRC will accept that return as replacing the determination.

There is generally a statutory time limit from the date the filing deadline passed (or from when the determination was made, depending on the rules and timing) after which the determination becomes final and cannot be displaced by a late-filed return. In practical terms, this means you can be in a situation where you finally get around to filing, only to be told it’s too late to change the determined amount.

This is why speed matters. If you have received a determination, you should treat it as a serious warning that you are already significantly late and time may be running out to fix the position through normal filing.

If you’re uncertain about the deadline that applies to your tax year, you should verify it quickly using official HMRC guidance or professional support, because missing the replacement window can have major financial consequences.

What happens if you file the overdue return in time?

If you submit the missing Self Assessment return within the allowed window, HMRC can use the figures from your return to supersede (replace) the determination. In plain terms, your return takes back control of the calculation.

When that happens:

• The tax liability should be recalculated based on your declared figures and claims.

• Any overstatement in the determination can be corrected, reducing the bill.

• Payments already made can be reallocated against the correct liability.

• You may still face late filing penalties and interest for late payment, but at least the underlying tax bill should be accurate.

For many taxpayers, this is the best-case scenario after a determination: you still have to mop up penalties and interest, but you avoid being stuck with an inflated “made-up” liability.

What happens if you don’t file in time and the determination becomes final?

If the time limit expires and the determination becomes final, you can be left with an assessed amount that does not reflect your true tax position, and you may not be able to displace it simply by filing a return late. In effect, you can lose the normal mechanism for correcting the tax bill.

This can feel deeply unfair, especially if your actual profits were low or you had losses. But from HMRC’s perspective, the system relies on taxpayers meeting filing obligations. The determination mechanism exists partly to stop people delaying indefinitely while HMRC is unable to raise enforceable assessments.

When a determination becomes final, resolving the situation can be more complicated. Depending on the facts, you may need to explore exceptional routes, negotiate with HMRC, or consider whether there are grounds for specific reliefs or procedural challenges. These situations can be highly case-specific.

Does HMRC still want the missing tax return if there’s a determination?

Often, yes—at least initially. HMRC’s aim is generally to get the return filed because that’s how the final liability is established. If you’re still within the replacement window, filing the return is usually strongly advisable.

Even where time limits have passed, filing might still be useful for clarity and record-keeping, but it may not automatically change the determined tax bill. However, it can sometimes assist in discussions with HMRC, support requests for adjustments, or provide evidence for why the determined amount is unrealistic. The value of filing late in those circumstances depends on your position.

How a determination can affect payments on account

Self Assessment taxpayers may be required to make “payments on account” toward the next year’s tax bill—typically two instalments based on the previous year’s liability. A determination can influence this because it sets an assessed liability for the year, which can then feed into calculations for payments on account.

If the determination is high, it can create a double financial shock:

• A large bill for the year being determined, and

• Large payments on account demands for the following year

This can quickly become unaffordable. If you later file and replace the determination with a lower true liability, payments on account can be reduced accordingly. But until that happens, HMRC’s system may continue to show payment demands based on the determination.

That’s another reason to act promptly: a determination can distort not only the year in question but also future payment expectations.

What if HMRC issues a determination and you’ve already paid some tax?

It’s possible you’ve already made payments—perhaps based on previous returns, estimated payments, or partial amounts you sent to HMRC. Once a determination is issued, HMRC will generally allocate payments against outstanding liabilities on your account. This can become confusing, especially if:

• You paid something without a clear reference

• You have multiple tax years outstanding

• The determination creates a new assessed debt that “soaks up” payments you thought were for another year

If you later file and replace the determination, HMRC should recalculate the account. That can result in a credit or a reduced balance. But in the meantime, it’s common for taxpayers to feel like their payments have “disappeared” or been ignored, when in reality they’ve been allocated to the assessed amount.

Debt collection: can HMRC enforce a determination?

Yes. A determination is not just a warning letter; it can be used as the basis for collection activity. If you do nothing, HMRC may pursue the amount through normal debt recovery channels. That can include payment demands, collection notices, and escalation if the debt remains unpaid.

It’s worth separating two issues:

• Whether the determination is accurate, and

• Whether HMRC can pursue it

Even if you believe it is inaccurate, HMRC may still seek payment unless and until it is replaced or otherwise adjusted within the legal framework. That’s why tackling determinations quickly is so important.

What should you do immediately after receiving a determination?

When a determination arrives, the best response is structured, not panicked. Here’s a practical approach that works in many cases:

1) Confirm which tax year it relates to

Determinations are year-specific. Make sure you are looking at the right year and that you understand what is missing. If multiple years are outstanding, you may have more than one issue to fix.

2) Check what HMRC thinks you owe and why

The determination should state an amount. It may not explain the assumptions in detail, but your Self Assessment account and correspondence might indicate what HMRC based it on.

3) Work out your true position as quickly as possible

Gather your records: income, expenses, bank statements, invoices, PAYE information, pension contributions, and any relevant paperwork. If your records are incomplete, start reconstructing them. For many people, the biggest barrier is not willingness but the practical task of pulling everything together—yet the clock can be ticking on your ability to replace the determination.

4) File the missing return if you are within the replacement window

In many cases, filing the missing return is the primary solution. If you don’t feel confident, professional help can be valuable, especially if you have multiple income sources or complex issues such as losses, property income, foreign income, or capital gains.

5) Engage with HMRC about payment if you cannot pay immediately

If the determination creates a demand you can’t meet, you may need to discuss a Time to Pay arrangement or other payment options. The key is communication. Silence can lead to escalation.

6) Address penalties separately

Even once the tax is corrected, penalties may remain. If you have a reasonable excuse for late filing, you might challenge penalties. Keep the issues distinct: correcting the tax bill is one task; dealing with penalties is another.

Reasonable excuse and penalties: how they fit into the picture

People often focus on the determination figure and forget that penalties may be compounding. If you had circumstances that prevented you from filing—serious illness, bereavement, IT failures beyond your control, unexpected life disruption—you may be able to argue that you had a reasonable excuse for late filing, which could reduce penalties.

However, a reasonable excuse claim usually needs evidence and a clear timeline. HMRC will consider whether you acted promptly once the excuse ended. So if you were ill for a period but then waited many more months without taking steps, the claim may be weaker.

Also, reasonable excuse arguments tend to focus on penalties rather than changing the tax liability itself. The determination amount is usually corrected by filing the return, not by arguing that you had a reasonable excuse.

What if you don’t think you needed to file a return at all?

Sometimes HMRC issues a notice to file and the taxpayer believes it was unnecessary—perhaps because income was below thresholds or tax was fully paid under PAYE. If HMRC issued a notice to file, ignoring it can still trigger penalties and potentially a determination.

In those situations, it’s often better to resolve the filing requirement head-on rather than simply not filing. Depending on the circumstances, you may be able to get the notice withdrawn or submit a return showing no additional tax due. But the right approach depends on why HMRC issued the notice and what income sources you had that year.

Even if you ultimately owe nothing, a determination can still be raised if you fail to file when required. That’s because the determination is a mechanism to create an enforceable assessment when no return is delivered, not necessarily a reflection of actual tax due.

Determinations and multiple outstanding years

It’s common for determinations to appear in clusters when someone has fallen behind for several years. You might receive multiple letters, multiple penalty notices, and determinations for different years at different times.

When multiple years are involved, the strategy is often:

• Identify which years have notices to file and which returns are outstanding

• Prioritise years where time limits are tightest for replacing determinations

• File returns in a logical order (often oldest first, but urgency can change that)

• Keep a clear record of what has been filed and what HMRC has acknowledged

In multi-year situations, it can be helpful to treat it like a project: create a checklist, gather records systematically, and track every submission and response.

How long does it take HMRC to update records after you file?

After you file a late return intended to replace a determination, there may be a delay before HMRC’s systems reflect the updated liability. During that time, your account may still show the determination figure, and you may still receive payment reminders based on it.

This can be frustrating, but it’s not unusual. Keep proof of filing (submission receipts, copies of returns, and any communications) and monitor your online account. If the return has been filed and you are within the relevant time window, HMRC should eventually update the figures.

If the account does not update and you believe it should, contacting HMRC with your submission evidence may be necessary.

Can a determination affect your credit or financial life?

HMRC tax debts can affect your finances indirectly. While HMRC does not generally report standard tax debts to credit reference agencies in the same way consumer lenders do, serious debt enforcement action can create problems. For example, if matters escalate into legal proceedings, that can have wider consequences.

More commonly, the impact is practical: you may find it harder to get up-to-date tax calculations for mortgage applications, grants, or other financial checks if your tax affairs are not current. If you are self-employed, lenders often ask for SA302s or tax year overviews; a determination and missing returns can make providing these documents difficult until things are corrected.

How to reduce the risk of receiving a determination in the future

Once you’ve dealt with a determination, it’s worth putting simple safeguards in place so it doesn’t happen again. Practical steps include:

• Keep your address updated with HMRC so you receive notices to file and reminders.

• Keep basic bookkeeping up to date monthly rather than scrambling once a year.

• Use a calendar reminder for key dates (31 January is the big one for online filing and payment, but planning earlier helps).

• If you no longer need to be in Self Assessment, tell HMRC rather than assuming it will stop automatically.

• If you use an agent/accountant, agree clearly who is responsible for filing and what information you need to provide, by when.

• Keep a folder (digital or physical) for tax-year documents as you go: P60/P45, P11D, dividend statements, interest certificates, pension contributions, gift aid records, and business expense receipts.

These steps aren’t about perfection; they’re about reducing the chance of missing a deadline and triggering HMRC’s estimation process.

A simple example to show how determinations can inflate the bill

Imagine a self-employed person who earned £60,000 in their first year of trading, then had a tough year and earned only £15,000 the following year. If they filed on time in year one but failed to file in year two, HMRC might assume similar profits to the previous year and issue a determination based on £60,000 again.

That could create a bill far higher than the tax actually due on £15,000—especially if the person also had allowable expenses, pension contributions, or losses. If that person files the overdue return in time, the determination can be replaced and the liability corrected. If they miss the replacement window, they could be stuck arguing about an inflated assessment long after the fact.

This example highlights the central risk: determinations often reflect HMRC’s best guess, not the reality of your year.

Key takeaways

If HMRC issues a determination instead of processing a tax return, it usually means one thing: HMRC believes you were required to file, and you didn’t do it in time. The determination is an estimated assessment that can be enforced and can trigger escalating costs through interest and penalties.

The most important practical point is that determinations are time-sensitive. In many cases, your best route to correcting a determination is to submit the missing return quickly so it can replace HMRC’s estimate. If you delay too long, you may lose the straightforward ability to displace the determination, even if it’s wrong.

If you receive a determination, treat it as a priority. Identify the tax year, work out your true figures, file the missing return if you still can, and communicate with HMRC if you need time to pay. Once the correct liability is established, you can then tackle penalties and interest with a clearer picture of what you truly owe.