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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: 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

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    
£300 No
No CH62140    
  12 months after the penalty date If deliberate and concealed, greater of 100% of tax liability shown on return
£300 Yes
No CH62160+    
  12 months after the penalty date If deliberate but not concealed, greater of 70% of tax liability shown on return
£300 Yes
No CH62160+    
  12 months after the penalty date If not deliberate, greater of 5% of tax liability shown on return
£300 No
No CH62160+

Penalties where the outstanding return includes an offshore matter

See the guidance at CH62260+ and CH63720.

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

£300

  No

No

  CH62380    
  12 months after the penalty date If deliberate and concealed, greater of 100% of tax liability shown on return

£3000

  Yes

No

  CH62400+    
  12 months after the penalty date If deliberate but not concealed, greater of 70% of tax liability shown on return

£1500

  Yes

No

  CH62400+    
  12 months after the penalty date If not deliberate, greater of 5% of tax liability shown on return
£300 No
No 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  
Refer note below No    
  6 months after the penalty date Greater of 5% of tax liability shown on return
£300 No
No CH62720    
  12 months after the penalty date If deliberate and concealed, greater of 100% of tax liability shown on return
£300 Yes
No CH62730    
  12 months after the penalty date If deliberate but not concealed, greater of 70% of tax liability shown on return
£300 Yes
No CH62740+    
  12 months after the penalty date If not deliberate, greater of 5% of tax liability shown on return
£300 No
No 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