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HMRC internal manual

Company Taxation Manual

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HM Revenue & Customs
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CTSA: penalties for late returns: determination: procedure

TMA70/S100

You charge penalties incurred under FA98/SCH18/PARA17 & 18 (formerly TMA70/S94) by formal determination. The notice of determination served on the company must state:

  • the date of issue,

and

  • the time within which the company may appeal.

COTAX deals with these determinations. (See On-line Company Tax Manual (COM) in the Penalties’ business area.)

Penalties under Paragraphs 17 & 18 are charged for each failure to deliver a return by the filing date. A notice to deliver can require the delivery of a return for more than one return period so more than one penalty can be due in respect of a single notice.

Examples 1 and 2 below contain examples of this. In both examples the company incurs the penalties in respect of the same Paragraph 3 notice and they are normally charged in the same determination.

Example 1

In this example the company incurs the penalties in respect of the same Paragraph 3 notice and they are normally charged in the same determination.

  • Company A makes up accounts for the year to 31 December 1999.
  • It ceases trading on 30 September 1999 but continues to receive investment income after that date.
  • Accounting periods end on 30 September 1999 and 31 December 1999.
  • A Paragraph 3 notice specifying the period 1 January 1999 to 31 December 1999 is served on 1 April 2000.
  • The company must file a return for both the accounting periods ended 30 September 1999 and 31 December 1999.
  • It fails to deliver both returns until 1 February 2001.

The company is liable to a flat-rate penalty of:

  • £100 for failing to deliver its return for the accounting period to 30 September 1999 by the filing date, 31 December 2000,
  • £100 for failing to deliver its return for the accounting period to 31 December 1999 by the same filing date.

Example 2

In this example the company incurs the penalties in respect of the same Paragraph 3 notice and they are normally charged in the same determination.

  • Company B makes up its accounts for the 12 months to 31 December 1999 and 3 months to 31 March 2000, both of which are accounting periods.
  • A notice to deliver is served on 1 July 2000, specifying the period 1 April 1999 to 31 March 2000.
  • The company must file a return for both the accounting periods ended 31 December 1999 and 31 March 2000.
  • The company delivers both returns on 1 May 2001.

The company is liable to a flat-rate penalty of:

  • £200 for failing to deliver the return for the year to 31 December 1999 within three months of the filing date (31 December 2000),
  • £100 for failing to deliver its return for the period to 31 March 2000 by the filing date (31 March 2001).