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HMRC internal manual

Compliance Operational Guidance

From
HM Revenue & Customs
Updated
, see all updates

Supporting Guidance: employer compliance: guidance by subject: penalties: incorrect end of year returns - pre April 2009

You do not use the PDAC when calculating these penalties.

Section 98A(4) TMA 1970 provides a tax, NIC geared penalty for fraudulently or negligently submitting an incorrect End of Year return COG914085 for returns due to be filed prior to 1/4/2009.

The maximum penalty before abatements is an amount equal to the difference between the tax and NIC liability returned and the tax and NIC liability which should have been payable. The amount actually paid is not relevant in calculating the difference but may be relevant when considering the abatement for seriousness - COG914120 and COG914125 - Things to consider under seriousness.

For example, a form P35 which returns £8,000

  • where it is later demonstrated that
  • £14,000 of tax and NICs should have been returned
  • attracts a maximum penalty before abatements of £6,000.

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

You should

  • provide HRA advice and
  • issue factsheets CC/FS7a and CC/FS19
  • consider whether the return was also submitted late COG914050- failure to submit over 12 months of lateness and COG914055 - failure to submit form P11D(b)
  • consider the overall penalty position on the return COG914081 - two or more duty geared penalties

to the employer/contractor at the earliest opportunity COG906060 - penalties - when to issue.

If it has been necessary to issue formal determinations or decisions consideration should be given to issuing penalties at the same time. COG914175 - formal action

Regulation 80 Determinations - COG915150

Section 8 NICs Decision - COG915155

Regulation 13 Determinations - COG909400

Whenever penalties for an incorrect return are considered you must also

  • consider whether the return was also submitted late COG914050 - failure to submit over 12 months of lateness and COG914055 - failure to submit form P11D(b)

consider the overall penalty position on the return COG914081 - two or more duty geared penalties.