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HMRC internal manual

Debt Management and Banking Manual

From
HM Revenue & Customs
Updated
, see all updates

Debt and return pursuit: Machine Games Duty (MGD): penalties and interest

MGD operators are subject to penalties when they fail to:

  • file their return on time
  • make their payment on time.

Late-filing and late-payment penalties will be managed automatically within ETMP and the appropriate penalty documents and payslips will be issued by ETMP.

Late-filing penalties

Penalties apply where there is a failure to file an MGD return by the due date. A penalty period of 12 months is applied following any failure to file on time and any subsequent failure during the 12 month period will result in an increased penalty. There is a penalty charge for each failure to file on time.

The penalty period is only ‘reset’ following 12 months filing compliance; in other words, returns are filed on time for the subsequent four quarters.

Late-filing penalties will be applied as follows.

At the first instance of failing to file on time £100
   
Second instance £200
Third instance £300
Fourth instance £400
And subsequently £400

 

There are also tax-geared penalties of 5 per cent of any duty that remains unpaid at six months after the penalty date, or £300, whichever is greater. Continued failure to file at 12 months will result in a work item being created on an ETMP worklist for Compliance officers to review and take appropriate action.

Late-payment penalties

Penalties apply where there is a failure to pay the MGD due by the due date. A penalty period of 12 months is applied following any failure to pay on time and any subsequent failure during the 12 month period will result in an increased penalty. There is a penalty charge for each failure to pay the amount due on the return on time.

The penalty period is only ‘reset’ following 12 months payment compliance; in other words, payments are made on time for the subsequent four quarters.

The first failure to pay on time results in a penalty warning letter at which time the penalty period will be set. Any subsequent default will result in a penalty as follows:

Second instance penalty is 2 per cent of the duty unpaid by the due date.
   
Third instance penalty is 3 per cent of the duty unpaid by the due date.
Fourth instance penalty is 4 per cent of the duty unpaid by the due date.
And subsequently penalty is 4 per cent of the duty unpaid by the due date.

 

There are also tax-geared penalties of 5 per cent of any duty that remains unpaid at six months and 12 months from the date of failure.

Taxes Acts penalties

MGD operators are also subject to ‘behavioural penalties’; in other words, Taxes Acts penalties which are raised by Compliance officers via the National Penalty Processing System (NPPS) using existing processes in DMBM569060. However, there is a notable exception in that unlike existing Taxes Acts penalties, MGD behavioural penalties are interest-bearing.

Interest

Interest is charged on late-payment of all MGD charges including penalties. The due date for payment of MGD is 30 days after the end of the relevant return period.