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HMRC internal manual

Compliance Handbook

HM Revenue & Customs
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Penalties for Failure to Notify: Types of failure to notify: Non-deliberate - Examples

Example 1

Mark is employed as a bus driver. He is not issued notices to make a self-assessment return. An aunt leaves him £80,000 in her will. He puts the money on deposit in the bank while he decides what to do with it. The bank deducts income tax from the interest at basic rate. Part of his income now falls into the higher rate band and therefore he has an additional tax liability which he fails to notify to HMRC. In view of Mark’s apparent knowledge and experience you accept that he was not aware that he was liable to pay more tax. His failure is non-deliberate.

Example 2

Emma, a self employed builder, is not registered for VAT. She does not pay much attention to record-keeping responsibilities and has no structured system for making sure that her records are accurate. Emma’s latest 12 months sales are slightly above the threshold for registering for VAT but as her sales figures are wrong she fails to recognise that she should be registered for VAT. You accept that the evidence demonstrates that Emma did not deliberately fail to keep records to enable her to know when her turnover had breached the threshold. Her failure to notify is non-deliberate.

Example 3

Franz opened a jeweller’s shop and knew he must tell us that he was liable to income tax. Before he can notify us, Franz suffers a serious health problem from which he takes several months to recover. While he is recovering, Franz takes a reduced role in running the business. He waits until he has been running the business full-time again for a further 8 months before notifying us of his liability. Franz had a reasonable excuse for failing to notify us but failed to remedy the failure without reasonable delay once the excuse had ended. This is a non-deliberate failure.