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HMRC internal manual

Compliance Handbook

Charging penalties: introduction: failure to notify - old and new penalties

The introduction, on 1 April 2010, of new failure to notify penalties under FA08/Sch41 has not changed the person’s obligation to notify chargeability or register with HMRC. You must be clear about which penalty legislation to apply to each specific failure. This will depend on the tax period or relevant period, see CH71200.

Single obligation (for example VAT)

Where a single obligation to notify occurred before 1 April 2010, the failure penalty for the whole of the relevant period must be calculated and charged under the old penalty legislation.


Sally should have notified a liability to be registered for VAT from 31 March 2008. You do not become aware of that obligation until 12 November 2010.

You should charge a penalty based on Sally’s tax liability for the whole of the return period using the previous legislation. You would not charge an FA08/Sch41 penalty on the tax liability that arose after 31 March 2010 because the obligation to notify fell before 1 April 2010.

Annual obligation (for example income tax)

Where the person has an annual obligation to notify, a penalty is charged for each tax period for which there has been a failure.


Michael failed to notify liability to income tax for 2008-09 and 2009-10. You should charge a penalty for 2008-09 under TMA70/S7(8), see EM4500. The penalty for 2009-10 will be charged under FA08/Sch41.

Schedule 41 penalties must be authorised in accordance with the guidance at CH407740 while predecessor penalties are authorised in accordance with earlier arrangements.

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