Guidance

Compliance checks: country-by-country reporting penalties (CC/FS59)

Updated 11 May 2022

Country-by-country reporting penalties

This factsheet is about penalties we may charge in relation to country-by-country reporting. These penalties include penalties for inaccurate information and penalties for not meeting obligations under The Taxes (Base Erosion and Profit Shifting) (Country-by-Country Reporting) Regulations 2016.

When we may charge you a penalty

HMRC may charge a penalty if you do not meet one or more of the obligations to:

• file a country-by-country report by the filing deadline
• notify us about country-by-country reporting by the deadline date
• give us more information (for the purposes of determining the accuracy of information within a country-by-country report) within the time stated

We may charge you a penalty for inaccurate information if you send us either:

• an inaccurate country-by-country report
• inaccurate additional information that we ask for to check the report is correct

An inaccuracy is an error that prevents HMRC, an overseas tax administration, or a fiscal authority from being able to accurately check the country-by-country report.

If you ask someone else (such as an employee or adviser) to do something on your behalf, you must do as much as you can to make sure there is no inaccuracy. If you do not, we may charge you a penalty.

When we may not charge you a penalty for an inaccuracy

We may not charge you a penalty for an inaccuracy if you:

• took reasonable care to get things right, but your country-by-country report was still wrong
• let us know straightaway if you find your report is wrong — this can include sending an amended report

If you think a reasonable excuse applies

You may not be liable to a penalty for the failure if all the following apply:

• you have a reasonable excuse for the failure
• the failure was not deliberate
• you told us without unreasonable delay after your reasonable excuse ended

A reasonable excuse is something that stopped you from meeting a tax obligation on time which you took reasonable care to meet. It might be due to circumstances outside your control or a combination of events. Once the reasonable excuse has ended, you must put things right without any unnecessary delay.

Whether you have a reasonable excuse depends upon the circumstances in which the failure occurred and your particular circumstances and abilities. This may mean that what is a reasonable excuse for one person may not be a reasonable excuse for someone else. If you think you have a reasonable excuse, please tell us. If we accept that you have a reasonable excuse, we will not charge you a penalty.

If there was anything about your health or personal circumstances that made it difficult for you to notify us of your liability to tax, please tell the officer that is carrying out the check. Telling them will mean that they can take this into account when considering whether you had a reasonable excuse.

For more information about reasonable excuses, go to www.gov.uk/tax-appeals/reasonable-excuses.

How we work out the amount of a penalty

We charge a £300 penalty for not meeting an obligation. We may charge a penalty for each failure made in a reporting period. This means there could be multiple penalties in a reporting period.

If you’ve still not met an obligation by the time we have notified you of the £300 penalty, we may then charge daily penalties of £60. We will charge the penalty for each day that you do not meet that obligation.

For inaccuracies in a country-by-country report, or in additional information we have asked for, we may charge a penalty up to £3,000 for each report that an inaccuracy relates to.

When assessing the amount of a penalty, we consider:

• the number of error types
• whether there is a material error
• whether more than one jurisdiction is affected
• whether the company has previously sent HMRC an inaccurate country-by-country report
• whether the company has previously sent inaccurate supplementary information about a country-by-country report
• whether the company disclosed the error to HMRC

This is not a full list. We may take other things into account when we assess the amount of the penalty.

How we tell you about a penalty

If we consider you are liable for a penalty for not meeting your obligations, we’ll write to you. When we write, we’ll ask you to meet your obligations and tell you the amount of the penalty we may charge. You should tell us straightaway if there’s anything about the penalty that you do not agree with, or if you think there’s any information we’ve not already considered.

If we find an inaccuracy, we’ll give you the opportunity to correct the country-by-country report or additional information. If it’s not an inaccuracy, you must tell us why the information is accurate. This is called an error correction request.

The error correction request may include the opportunity for you to correct the error to avoid penalties. This means we’ll take no further action if you submit a correction.

After taking into account anything you’ve told us, we’ll either:

• send you a penalty assessment notice
• take no further action

You may also have to pay interest on the penalty if you do not pay it on time.

If you’ve deliberately done something wrong

We may carry out a criminal investigation with a view to prosecution if you’ve deliberately done something wrong. For example, if you give us information (verbally or in a document) that you know is not true.

If you disagree

If there’s something that you do not agree with, please tell us.

You can appeal against any penalties we charge you in relation to a country-by-country report. You do this by writing to us within 30 days from the date we tell you about the penalty. If you decide to appeal, you must tell us your reasons for appealing when you write to us.

Your rights when we’re considering penalties

The European Convention on Human Rights gives you certain important rights. If we’re considering charging you penalties, we’ll tell you. We’ll also tell you that these rights apply and ask you to confirm that you understand them. These rights are that:

• if we ask you any questions to help us decide whether to charge you a penalty, you’ve the right not to answer them — the amount of help that you give us when we are considering penalties is entirely a matter for you to decide
• when deciding whether to answer our questions, you may want to get advice from a professional adviser — particularly if you do not already have one
• if you disagree with us about the tax or any penalties we believe are due, you can appeal — if you appeal about both tax and penalties, you’ve the right to ask for both appeals to be considered together
• you’ve the right to apply for funded legal assistance for dealing with any appeal against certain penalties
• you’re entitled to have the matter of penalties dealt with without unreasonable delay

You can find full details about these rights in factsheet CC/FS9, ‘The Human Rights Act and penalties’. Go to www.gov.uk and search for ‘CC/FS9’.

Our privacy notice

Our privacy notice sets out the standards that you can expect from us when we ask for information or hold information about you. Go to www.gov.uk and search for ‘HMRC Privacy Notice’.