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HMRC internal manual

COTAX Manual

Background: typical case examples: company pays late and delivers late

An established company fails to meet its payment and filing obligations on time. It incurs late payment interest (LPI) and the higher flat-rate penalty, before finally meeting its obligations.

The events are numbered in date order, and identified as follows.

  • Business event - action taken or arising outside HMRC.
  • Automatic event - automatic COTAX action.
  • Procedural action - action taken by an operator.
Order and type of event Action or actions taken
1 Business event Company AP ends (normal 12 month period).

Approximately 1 month after the recorded AP ends

2 Automatic event COTAX issues a notice to deliver, calculates the filing date (Word 42KB), records the specified period and the issue of the notice to deliver and creates the next AP on the COTAX record.
   

Some time later………………

3 Automatic event First payment reminder (PR1) issued, 12 days before normal due date (Word 49KB) as no payment or NIL payslip returned to Accounts Office.
   
4 Business event Payment due date passes with Nil paid.
5 Automatic event Late payment interest starts to run on unpaid tax from the normal due date.
6 Automatic event CT208 combined return and payment reminder issued 28 days before the filing date as no payment or NIL payslip has been received and the return is not yet logged.
7 Business event Filing date passes without receipt of a return.
8 Automatic event COTAX records first flat-rate penalty (F1) stage reached and company incurs flat-rate penalty of £100 or £500 as appropriate.
9 Automatic event 14 days later COTAX records first flat-rate penalty (F1) stage charged and issues the first flat-rate penalty.
10 Automatic event) 30 days later COTAX issues a payment application for the penalty.

Some time later………………

11 Business event Filing date + 3 months + 1 day passes without receipt of a return.
   
12 Automatic event COTAX records second flat-rate penalty (F2) stage reached and flat-rate penalty increases to £200 or £1000 as appropriate.
13 Automatic event 14 days later COTAX records second flat-rate penalty (F2) stage charged and issues the second flat-rate penalty.
14 Automatic event 30 days later COTAX issues a payment application for the penalty.
15 Business event Return received late, but before the tax-related penalty stage reached.
16 Automatic event COTAX automatically captures the details and records the self assessment.
17 Business event Full payment received at Accounts Office to settle the unpaid CT, late payment interest and penalties.
18 Automatic event COTAX posts interest charge, as further interest accrual stops when full payment is received.

See:

  • COM33011 for a list of forms relevant to this subject
  • COM33012 for a list of functions to use in particular situations
  • COM33013 for legislation applying to this subject.