CH81090 - Penalties for inaccuracies: in what circumstances is a penalty payable: under-assessment by HMRC
You must check the date from which these rules apply for the tax or duty you are dealing with. See CH81011 for full details.
We will normally issue an estimated assessment, or HMRC determination, of a person’s liability where
- a return has been issued to the person and it has not been returned, or
- a person is required to deliver a return to HMRC but it is not delivered.
We will then charge a penalty where
- an assessment or determination that we issued in these circumstances understates a person’s liability to tax or duty, and
- the person fails to take reasonable steps, see CH81080, within 30 days of the date of the assessment to tell us that it is an under-assessment of their liability.
For further guidance on under-assessments, see CH81170.
A person who sends their return in on time will not receive an assessment of estimated liability. They will have self-assessed, or declared their tax liability, and so this penalty will not apply.
Please note that the guidance above applies when we are checking whether the person has failed to take reasonable steps to notify HMRC of an under-assessment within 30 days.
When we are checking whether the person has, for the purposes of evading VAT, dishonestly withheld their VAT return you may consider taking penalty action under VATA 94 S60.
See CH401300 and CEP - Civil Evasion Penalties
FA07/SCH24/PARA2