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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 with a disclosure

The following process applies where the failure to file continues for 12 months and the person makes a disclosure, see

  • CH62240 for occasional returns and returns for periods of 6 months or more, and
  • CH62480 for CIS returns, and
  • CH62780 for returns for periods between 2 and 6 months.

See CH63200+ for the higher penalty percentages that may apply if the return involves an offshore matter.

Step 1

Calculate the percentage for the quality of the disclosure (d), following the guidance at CH63220.

Step 2

Having established the quality of disclosure and whether the disclosure was prompted or unprompted, identify from the table at CH63200

  • the maximum penalty (f)
  • the minimum penalty (g).

Then calculate the maximum disclosure reduction (e).

(e) = (f) - (g)

Step 3

Calculate the actual reduction percentage for disclosure (h) by multiplying the maximum disclosure reduction (e) by the percentage for the quality of the disclosure (d).

Actual reduction percentage for disclosure (h) = (e) x (d).

Step 4

Calculate the penalty percentage (c) by deducting the actual reduction percentage for disclosure (h) from the penalty maximum (f).

Penalty percentage (c) = (f) - (h).

Step 5

To arrive at the amount of the penalty (a) apply the penalty percentage (c) to the liability to tax, or liability to payment for CIS returns, which would have been shown in the return in question (b).

Penalty chargeable (a) = (b) x (c).

The penalty should be rounded down to the next £1.

Step 6

Check whether the penalty chargeable (a) using the above process is larger than the minimum amounts.

  Return for periods between 2 and 6 months CIS returns                        
Deliberate and concealed £300 £3,000
Deliberate but not concealed £300 £1,500

Penalties therefore fall into certain ranges. The disclosure reduction will determine where they fall within that range, see CH63200 or CH112700 if the disclosure involves an offshore matter.

  Penalty range for unprompted disclosure Penalty range for prompted disclosure
Deliberate and concealed 30% - 100% 50% - 100%
Deliberate but not concealed  20% - 70% 35% - 70%

Examples of penalty calculations are at

  • CH63680 for unprompted disclosure, and
  • CH63700 for prompted disclosure.

FA09/SCH55/PARA6

FA09/SCH55/PARA11
FA09/SCH55/PARA15