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HMRC internal manual

COTAX Manual

Penalties: penalty determinations: introduction

Where penalties are incurred they are charged under Paras 17 and 18 Schedule 18 FA 1998.

Penalty determinations may be issued automatically by COTAX or manually using function PPEN (Prepare Penalty Determinations).

The amount of the penalty depends on the date that the company delivers the return.

Penalties are defined in Paras 17 and 18 Schedule 18 FA 1998, as flat-rate and tax-related.

You make the determinations under S100 TMA 1970 for failure to make a return in response to a notice to deliver.

The notice of determination served on the company must state the date of issue and the time limit for making an appeal.

You can use function DAPD (Display AP Details) to view the details that COTAX used to calculate a flat-rate or tax-related penalty.

These details include the:

You can also use function DPEN (Display Penalty Determination) to view the details of any penalty determination issued.

A penalty determined under S100 TMA 1970 is due and payable 30 days after the date of issue of the notice.

Once a penalty determination has become final and conclusive it can only be amended when you accept a late appeal or under S100(6) TMA 1970 where the amount ‘taken into account as the relevant amount of tax is or has become excessive’.

When the tax charge is reduced and the CT chargeable forms the basis for a tax-related penalty determination, COTAX automatically recalculates and issues the amended tax-related determination.

COTAX provides support for late-filing penalties only. It does not cater for other types of penalties, such as those which may be due if a company fails to give notice of chargeability under Para 2 Sch 18 FA 98.