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HMRC internal manual

Compliance Handbook

From
HM Revenue & Customs
Updated
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Penalties for failure to file on time: types of penalties for failure to file on time: occasional returns and returns for periods of 6 months or more: 12 month further penalties: behaviour

This page currently only applies to returns required for income tax, capital gains tax, bank payroll tax, the registered pension schemes legislation, annual tax on enveloped dwellings and stamp duty reserve tax. It does not apply to the Construction Industry Scheme (CIS), see CH62300+.

A person is liable to a 12 month further penalty if the return or other document remains outstanding after 12 months from the penalty date, see CH61160.

Example

Edward has not filed his 2014-15 ITSA return. The filing date is 31 January 2016. The penalty date is 1 February 2016. If the failure continues, Edward will be liable to the following penalties.

* Initial fixed penalty of £100 on 1 February 2016.
* Daily penalties, of £10 a day, from 1 May 2016 for 90 days.
* 6 month further penalty on 1 August 2016.
* 12 month further penalty on 1 February 2017.

The amount of the 12 month further penalty takes into account the behaviour of the person and whether, by failing to deliver the return or other document by the filing date, the person deliberately withheld information that would enable or assist HMRC to assess their tax liability.

Information deliberately withheld

If, by failing to make a return or other document, the person deliberately withholds information, the withholding of that information is either

  • ‘deliberate and concealed’ if the person deliberately withholds information and makes arrangements to conceal the fact that the information has been withheld, or
  • ‘deliberate but not concealed’ if the person deliberately withholds the information but does not make arrangements to conceal the fact that the information has been withheld.

Information not deliberately withheld

If, by failing to make a return, the person does not deliberately withhold information the failure is still subject to a penalty that is the greater of

  • 5% of the tax liability that would have been shown in the return, or
  • £300.

Where the person has demonstrated more than one behaviour it is the highest penalty percentage attributable to the behaviours demonstrated that is used to calculate the 12 month further penalty.

Without further information about why the return or other document was not filed 12 months after the filing date, the person will be liable to a 5% penalty. We will increase the percentage of the penalty if enquiries establish that the person deliberately withheld information.

See CH62220 for examples of

  • deliberate but not concealed, and
  • deliberate and concealed.

See CH62240 for details of the penalties that apply where the person withholds information.

A person can receive a reduction to the 12 month further penalties, where they had deliberately withheld information, if they make a disclosure, see CH63100+. But, we cannot reduce the 12 month 5% penalty for a disclosure.

See CH62260+ for penalties after 12 months where the return involves an offshore matter. Currently these only apply to income tax and capital gains tax.

FA09/SCH55/PARA6

FA09/SCH55/PARA27