CH63020 - Penalties for Failure to File on Time: Calculating the penalty: Overview
The amount of the penalty for failing to file on time is calculated differently depending on the type of return and how long the return has been outstanding, and whether the return relates to an offshore matter.
- Penalties for occasional returns and returns for periods of 6 months or more where the return does not relate to an offshore matter
- Penalties where the outstanding return includes an offshore matter
- Penalties relating only to CIS returns
- Penalties for returns for periods between 2 and 6 months
- Reductions
Penalties for occasional returns and returns for periods of 6 months or more where the return does not relate to an offshore matter
| Date on which liable to penalty | Determine amount | Occasional returns and returns for periods of 6 months or more | Possible Reduction for Disclosure | Guidance |
|---|---|---|---|---|
| On the penalty date | £100 | No | CH62100 | |
| 3 months after the penalty date | £10 per day for up to 90 days | No | CH62120 | |
| 6 months after the penalty date | Greater of | > 5% of tax liability shown on return\n> \n> £300 | No\nNo | CH62140 |
| 12 months after the penalty date | If deliberate and concealed, greater of | > 100% of tax liability shown on return\n> \n> £300 | Yes\nNo | CH62160+ |
| 12 months after the penalty date | If deliberate but not concealed, greater of | > 70% of tax liability shown on return\n> \n> £300 | Yes\nNo | CH62160+ |
| 12 months after the penalty date | If not deliberate, greater of | > 5% of tax liability shown on return\n> \n> £300 | No\nNo | CH62160+ |
Penalties where the outstanding return includes an offshore matter
See the guidance at CH62260+ and CH112800.
Penalties relating only to CIS returns
The offshore rules do not apply to CIS returns
| Date on which liable to penalty | Determine amount | CIS returns | Possible Reduction for Disclosure | Guidance |
|---|---|---|---|---|
| On the penalty date | £100 | No | CH62340 | |
| 2 months after the penalty date | £200 | No | CH62360 | |
| 6 months after the penalty date | Greater of | > 5% of tax liability shown on return\n> \n> £300 | No\nNo | CH62380 |
| 12 months after the penalty date | If deliberate and concealed, greater of | > 100% of tax liability shown on return\n> \n> £3000 | Yes\nNo | CH62400+ |
| 12 months after the penalty date | If deliberate but not concealed, greater of | > 70% of tax liability shown on return\n> \n> £1500 | Yes\nNo | CH62400+ |
| 12 months after the penalty date | If not deliberate, greater of | > 5% of tax liability shown on return\n> \n> £300 | No\nNo | CH62400+ |
Where there is no liability because the CIS return only relates to persons registered for gross payment, the penalties that are calculated as a percentage of the tax liability after 6 or 12 months are not applicable and the person is liable to the minimum fixed amount penalties, see CH62500.
When a person is new to CIS and the returns are due after October 2011, there is a maximum amount of fixed penalties that the person becomes liable for by failing to file CIS returns on time, and no minimum penalties that apply after 6 and 12 months, see CH62520+.
Penalties for returns for periods between 2 and 6 months
| Date on which liable to penalty | Determine amount | Return for periods between 2 and 6 months | Possible Reduction for Disclosure | Guidance |
|---|---|---|---|---|
| On the penalty date | > £100\n> \n> Refer note below | No | ||
| 6 months after the penalty date | Greater of | > 5% of tax liability shown on return\n> \n> £300 | No\nNo | CH62720 |
| 12 months after the penalty date | If deliberate and concealed, greater of | > 100% of tax liability shown on return\n> \n> £300 | Yes\nNo | CH62730 |
| 12 months after the penalty date | If deliberate but not concealed, greater of | > 70% of tax liability shown on return\n> \n> £300 | Yes\nNo | CH62740+ |
| 12 months after the penalty date | If not deliberate, greater of | > 5% of tax liability shown on return\n> \n> £300 | No\nNo | CH62740+ |
Note that if the failure to submit the return on time is not the first failure within the penalty period, see CH62720, then the amount of fixed penalty is
- £200 for the second failure
- £300 for the third failure, and
- £400 for the fourth and subsequent failure.
Reductions
When a return has been outstanding for 12 months the penalty is based on a percentage of the liability which would have been shown in the return. It is only tax-geared penalties for deliberate, either concealed or not concealed, withholding of information that can be considered for a reduction for the quality of disclosure, see CH63100+.
We can agree to a special reduction of the penalty in special circumstances, see CH63400.
The penalty may be reduced where the person has incurred another penalty that is calculated on the same liability to tax, see CH65060.
FA09/SCH55