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HMRC internal manual

Compliance Handbook

HM Revenue & Customs
, see all updates

Penalties for failure to file on time: Types of penalties for failure to file on time: Returns for periods between 2 and 6 months: 12 month further penalties: Behaviour - examples

This page currently only applies to returns required for machine games duty (MGD).

The following scenarios provide examples of different behaviours leading to withholding information.

Example 1 - deliberate and concealed

Steve runs ‘Lucky Las Vegas’ for which he has the appropriate license from the local authority. Steve has been filing MGD returns by the due date for several years, but did not file the return for the period ended 31 December 2013. when we contacted Steve, he said that he had sold the machines, and therefore was not required to file a return. After lengthy enquiries into Steve’s trading activities it became apparent that Steve had moved those machines to another site but they were still being used.

Steve deliberately withheld information by not filing the returns, and concealed his liability.

Example 2 - deliberate but not concealed

Lucky Las Vegas had a particularly busy an profitable three months. Rather than pay his MGD by the due date Steve wanted to use the MGD to purchase more machines. Consequently Steve did not file his MGD return by the due date.

After we had contacted Steve several times, he filed the overdue return. Steve deliberately withheld the return because he knew he’d have a larger than usual MGD liability, which he intended to use to purchase more machines, but he did not conceal his liability.

Example 3 - not deliberate

Lucky Las Vegas has machines that offer cash prizes, machines that offer non-cash prizes and machines that offer both cash and non-cash prizes (mixed machines). It is only permitted to offset against MGD liability the cash prizes and the value of the non-cash prizes in the mixed machines. However, due to poor stock control of the non-cash prizes, Steve accidentally offsets against MGD the value of some of the non-cash prizes used in non-cash only machines. Because this offsetting reduced Steve’s MGD to nil, he thought he did not have to file a return.