Beta This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

COTAX Manual

Penalties: penalty determinations: COTAX support

COTAX deals with determinations of flat-rate and tax-related penalties as follows.

Calculates the standard filing date (Word 38kb) for every return required in response to the service of a notice to deliver.

Enables you to record a revised or deferred filing date. For more information see COM130000 onwards.

Issues a reminder (CT205 or CT208) to the company 28 days before the filing date, if the return remains outstanding. The reminder includes a warning about the consequences of late filing and the penalties that may be incurred.

Records the occurrence of apparent liability to a penalty for each period for which a return is late under:

  • Para 17(1) and (2) Sch 18 FA 1998
  • Para 17(1) and (3) Sch 18 FA 1998
  • Para 18(1) and (2) Sch 18 FA 1998.

Makes and issues flat-rate penalty determinations automatically when:

  • a return has not been logged onto COTAX before the expiry of 14 days from the first flat-rate (F1) or second flat rate (F2) penalty stage reached signal being set

  • neither the inhibit penalty nor the no penalty required signal is set. See COM10110 for more information.

Makes and issues the first ten per cent tax-related penalty determination automatically 14 days after you issue a revenue determination in the absence of a company tax return, if you have not already issued the penalty using function PPEN (Prepare Penalty Determination).

Makes and issues the second ten per cent tax-related penalty determination automatically, when:

  • the ten per cent tax-related penalty has been determined or amended and there is no open appeal

  • the return is still outstanding 24 months after the end of the AP

  • there have been no changes to either the tax liability or the amount of tax unpaid since the ten per cent tax-related penalty was determined or amended.

COTAX also:

  • allows you to make flat-rate and tax-related determinations manually using function PPEN (Prepare Penalty Determination)
  • gives you the option of going from the assessing functions to the penalty function when you use one of the assessing functions to create or amend the tax charge and it calculates that a penalty should be charged or amended
  • issues notices of penalty determinations and explanatory letters to companies with copies to any authorised agent.

For further information, see this example which shows the normal sequence of events where a company fails to file its return and triggers the full cycle of automatic late-filing penalties (Word 71.5kb).

See COM101011 for legislation applying to this subject.