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HMRC internal manual

Compliance Handbook

Penalties for Failure to File on Time: Calculating the penalty: Calculation process: Calculating the 12 month further penalty where no disclosure

To calculate the penalty after 12 months where there has not been a disclosure, you multiply the tax liability that would have been shown in the return by the penalty percentage, and then check that this amount is greater than the minimum fixed penalty amount. If the return has still not been filed, you can use amounts in a determination or discovery assessment, see CH63560.

The following process applies where the failure to file continues for 12 months and the person has not made a disclosure. See CH63660 where the person has made a disclosure.

Step 1

The penalty percentage (c) varies depending on the behaviour of the person, see the table below, or

  • CH62200 for IT, CGT, BPT & RPS & ATED,
  • CH62440 for CIS, and
  • CH62760 for returns for periods between 2 and 6 months.

Decide the penalty percentage (c) based on the behaviour of the person.

Step 2

To arrive at the amount of the penalty (a), multiply the liability to tax (b) that would have been shown in the return by the penalty percentage (c).

(a) = (b) x (c)

Step 3

Check whether the calculated penalty (a) is greater than the minimum fixed penalty amount. The minimum penalties vary depending on the tax covered by the return, and are summarised in the table below.

If (a) is less than the minimum fixed penalty for that behaviour and for that tax type, then the minimum fixed penalty applies.

The penalty percentages and minimum penalties for each type of behaviour are summarised in the table below.

Behaviour Returns for periods between 2 and 6 months CIS returns
Deliberate and concealed, greater of 100% of tax liability shown on return, and £300 minimum penalty 100% of tax liability shown on return, and £3,000 minimum penalty
Deliberate but not concealed, greater of 70% of tax liability shown on return, and £300 minimum penalty 70% of tax liability shown on return, and £1,500 minimum penalty
Not deliberate, greater of 5% of tax liability shown on return, and £300 minimum penalty 5% of tax liability shown on return, and £300 minimum penalty

 See CH62260+ for the higher penalty percentages that may apply if the return involves an offshore matter.

FA09/SCH55/PARA6

FA09/SCH55/PARA11