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