Supporting Guidance: employer compliance: guidance by subject: penalties: raising formal penalty determinations - daily penalties and penalties for failure to submit a return (P35/CIS36/P11D(b) - (first 12 months of lateness)
COG914180 explains the initial action to be taken on all cases when raising formal penalty determinations.
Wherever possible penalties for failure to submit a return should be either
- included in a contract settlement,
- included in a formal penalty determination, or
- issued by the appropriate IT System (ECS or CISR - Note: from October 2011 we can no longer issue automated Section 98A penalties for late CIS returns via CISR).
When proceeding to raise formal penalty determinations for
- daily penalties following the determination of an initial penalty by the First-tier Tribunal (COG914185 - Raising Formal Penalty Determinations - Initial Penalties arising under S98(1)(a) or S98(1)(b) TMA 1970) or
- failing to submit a P35/CIS36/P11D(b) return (First 12 months of lateness) (see COG914290 for late-filed CIS300s due from 06-04-07 to 05-10-11).
- complete an AO Report Form - Authorisation Stencil (available via SEES - forms and letters)
- complete a 394 (IT/CT) (COG914200 - Class 1A NIC - Prior to 2000 - 2001) by following the guidance at EM5252 and EM5253 to adapt these forms by selecting the “Other” option from the penalty offence options, and
- enter Total Penalty Payable (if you do not wish to use the Tax and NIC table)
- details of the penalty - in this free text box you must enter the details of the statutory provision under which the penalty is being charged, (for example, S98A(2)(a) TMA 1970) and give a clear description of the act/failure giving rise to the penalty. You should use the correct legislative references contained within COG914180, and
- refer the case to the Authorising Officer.
The Authorising Officer will
- consider the information provided
- determine the penalty (if appropriate)
- sign the 394 and
- refer the papers back to you.
You will then
- prepare a penalty notice letter (EC25 - available via SEES - forms and letters)
- complete a SAFE referral stencil (Word 44KB) and
- send the stencil with the penalty notice letter and 394(IT/CT) to the SAFE officer.
The SAFE officer will
- create a charge on SAFE and
- return the documents to you along with a payslip.
The correct SAFE entry to use is
- for failure to submit P35/CIS36/P11D on time, the BROCS reference and penalty type ‘Non ECS PAYE EOY Penalty’.
For failure to submit CIS300s on time from 06-04-07- 05-10-11 see COG914290.
For failure to submit CIS300s on time from 06-10-11 see COG914297.
You will then
- issue the 394(IT/CT), letter and payslip to the employer/contractor and
- BF the case for 30 days.
If the employer/contractor appeals against any penalty determinations you should follow the guidance at COG914305.