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HMRC internal manual

Company Taxation Manual

CTSA: penalties for late returns: more than one tax-related penalty for the same accounting period

FA98/SCH18/PARA90 (TMA70/S97A)

Companies may be liable to two or more tax-related penalties in relation to the same amount of CT.

For example, a penalty can arise under both FA98/SCH18/PARA18 (formerly TMA70/S94 (6)) and FA98/SCH18/PARA20 (formerly TMA70/S96).

When a company incurs more than one tax-related penalty for the same accounting period,then only one such penalty, whichever is the greater or greatest, is imposed on each slice of relevant tax.


Company tax return  
Filing date 30 September 2000
Accounts and return filed 1 May 2001
Tax payable £25,000
Paid by 31 March 2001 (18 months after the filing date) £5000
Unpaid tax at 18 month point £20,000
Paragraph 18 tax-related penalty based on unpaid tax at 31 March 2001 £20000 x 10% = £2000
Enquiries establish negligent submission of incorrect accounts. Revised tax payable £30,000
Paragraph 20 maximum penalty £30000 - £25000 = £5000

Using an agreed penalty abatement for the Paragraph 20 penalty, the penalty calculationis:

Paragraph 18 penalty £20,000 x 10% = £2,000
Paragraph 20 penalty £ 5,000 x 30% = £1,500
Total £3,500

If there had been no Paragraph 20 culpability attaching to the additional £5,000, the total Paragraph 18 penalty would have been £25,000 x 10% = £2,500.