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HMRC internal manual

Compliance Operational Guidance

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HM Revenue & Customs
Updated
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Supporting Guidance: employer compliance: guidance by subject: penalties: class 1A failure to submit form P11D(b)

You do not use the PDAC when calculating these penalties.

Regulation 81(2)(a) and 81(2)(b) Social Security (Contributions) Regulations 2001

These penalties parallel TMA Section 98A(2)(a) and 98A(2)(b) penalties and the examples at COG914045 and COG914055 show how the calculations work.

First 12 months of lateness

Automatic fixed penalties are dealt with by the End of Year (EOY) Section.

You will include these penalties as part of the case settlement where

  • they are appropriate and
  • they have not already been issued by ECS.

It is important that you liaise with the EOY Section regarding these penalties.

The penalty is fixed at £100 per month, or part month, for each batch or part batch, of 50 earners for whom Class 1A is payable.

The total penalty payable is capped by virtue of regulation 81(5) of the same regulations. Regulation 2(a) says ‘shall not exceed the amount of Class 1A contributions in respect of the year to which the return in question relates.’

This means that if the liability on the P11D(b) is nil then the penalty will be capped to nil.

For example, a form P11D(b) return of 53 employees is received late by 4 months and 15 days - the penalty is £1000, calculated as follows:

50 employees (1 batch) @ £100

3 employees (part batch) @ £100

Total £200

£200 x 5 (4 months + 1 part month) = £1000.

Over 12 months of lateness

This provides a further penalty, additional to the fixed penalties above, where the failure continues beyond 12 months.

For example if the 2006-2007 return was not made by 19 July 2008, this additional penalty could be sought.

The maximum penalty before abatements is equal to the amount of unpaid Class 1A NICs at 19 July. See COG914050 for how the calculation works. Penalties under Regulation 81(2)(b) are abated in the same way as those under Regulation 98A(2)(b).

Note that these penalties are based on 100% of the NICs difference or the NICs underpaid and are subject to Article 6 of ECHR - COG906050.

You should

  • provide HRA advice and
  • issue factsheets CC/FS7a and CC/FS19

to the employer at the earliest opportunity, see COG906060 - penalties - when to issue.

COG914050 provides examples on calculating the penalty for failure to submit end of year returns and failure to submit form P11D(b). This example gives advice on how to apply both the first 12 months and over 12 months of failure in practice.

If it has been necessary to issue a decision consideration should be given to issuing penalties - COG914175 at the same time.

For Section 8 NICs Decision, see COG915155.

The Note at COG914050 applies equally to Regulation 81(2)(a) and 81(2)(b) as Section 98A(2)(a) and 98A(2)(b) penalties.

Where a late return is also found to be incorrect penalties for an incorrect or inaccurate return should be considered.

  • Penalties for incorrect P11D(b) returns for years 2009-2010 and prior are charged under Regulation 81(1) SSC regulations 2001 - see COG914075.
  • Penalties for inaccurate P11D(b) returns filed for 2010-2011 onwards are charged under Schedule 24 FA2007 - see CH80000.

When calculating two or more duty geared penalties see COG914081 for penalties charged under Regulation 81 and CH84950 when considering penalties under Schedule 24.