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HMRC internal manual

Compliance Handbook

Penalties for Failure to Notify: Calculating the penalty: Potential Lost Revenue: Corporation Tax

The potential lost revenue (PLR) from a failure to notify chargeability for corporation tax is the amount of tax that is unpaid 12 months following the end of the accounting period.

This includes any liability under CTA10/S455 in respect of loans to participators disregarding any relief under CTA10/S458 that is deferred under subsections (4) and (5).


Ertesma SA starts to trade in the UK through a permanent establishment on 1 February 2009. It fails to notify the Registrar of Companies until 28 February 2012 and does not contact HMRC until 4 March 2012 when it makes a payment of £10,000 on account of corporation tax for its accounting period ended 31 January 2010. It submits a return and accounts for the year ended 31 January 2010 on 7 March 2012. These show a corporation tax liability of £30,760.

The company has failed to notify liability to corporation tax within 12 months of the end of the accounting period. It has not paid any corporation tax by this date. The PLR is therefore £30,760.

If a company makes a return that omits or understates liability under CTA10/S455 you must consider whether the company has given you an inaccurate document. If it has, any penalty will lie under FA07/SCH24, see CH80000+.

FA08/SCH41/PARA7 (3) & (4)