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HMRC internal manual

Compliance Operational Guidance

HM Revenue & Customs
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Supporting Guidance: employer compliance: guidance by subject: penalties: time limits - pre April 2009

There are time limits for penalty proceedings. The limits are specified in Section 103 TMA 1970.

The basic rule is that penalty proceedings must be started within six years of the date on which the penalty was incurred.

In the case of a failure offence the penalty is incurred on the day after the deadline for action. For example, the day after the return filing date, so if a return is due on 19 May 2008 the penalty is incurred on 20 May 2008. COG914005 - Employer’s and Contractor’s Liability.

In the case of a return error penalty offence the penalty is incurred on the day the return is submitted. COG914005 - Employer’s and Contractor’s Liability.

Where the penalty is tax/NICs geared the time limit for penalty action is extended to three years after the tax/NICs is finally determined. This means three years after the Regulation 80/Regulation 13 determination/Section 8 NIC decision becomes final and conclusive.

It follows that in any case where we have not yet made a formal Regulation 80 determination - COG915150, Section 8 NIC decision - COG915155 or Regulation 13 determination - COG909400 the three year extension has not even begun to run for penalties.

There are of course separate time limits for Regulation 80/Regulatiom13 determinations and Section 8 NIC decisions.

Wherever the penalty is based on 100% of the tax/NICs difference or the tax/NICs underpaid it is accepted that it is subject to Article 6 of ECHR COG906050. Where this is the case you should

  • provide HRA advice and
  • issue factsheets CC/FS7a, CC/FS9 and CC/FS19

to the employer at the earliest opportunity. COG906060 - Penalties - when to issue

You must also make sure that the case is worked without unreasonable delay.