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HMRC internal manual

Compliance Handbook

Penalties for Failure to Notify: Calculating the penalty: Introduction

The penalty for failure to notify, see CH71220, is based on the amount of tax or duty unpaid or tax the person is liable for because of the failure. This is the potential lost revenue, or PLR, see CH72620. You must work out the amount of the penalty by applying an appropriate percentage to the PLR depending on whether the failure to notify is

  • deliberate and concealed, see CH72120
  • deliberate but not concealed, see CH72160, or
  • non-deliberate, see CH72200.

Most penalties will be calculated using the standard maximum penalty rates. Higher maximum penalties mat apply when offshore matters are involved, see CH73210.

Standard maximum penalty

The standard maximum penalty is

Type of failure Maximum penalty payable
Deliberate and concealed 100% of PLR
Deliberate not concealed 70% of PLR
Non-deliberate 30% of PLR

Higher penalty for certain offshore matters

There may be higher maximum penalty percentages for a failure to notify where

  • the failure involves an offshore matter and
  • the tax at stake is income or capital gains tax

For more information about these higher penalty percentages and the circumstances in which they apply see CH73210+.

Reduction for disclosure - all penalties

You may reduce the penalty depending on the quality of the disclosure, see CH73220. The reduction may not reduce the penalty below a minimum amount, see CH73200.

Where a person has taken a significant period to correct their non-compliance, or, they would previously have been able to make their disclosure through one of HMRC’s offshore facilities they can no longer expect HMRC to agree full reduction for disclosure. In such cases it is unlikely that HMRC would reduce the penalty more than 10 percentage points above the minimum of the statutory range.  For this purpose we would normally consider a ‘significant period’ to be over three years or less where the overall disclosure covers a longer period.

FA08/SCH41/PARA6 (1)