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

HMRC internal manual

Debt Management and Banking Manual

Time To Pay: agreeing or rejecting Time To Pay: surcharges, late payment penalties and Time To Pay

Surcharges and late payment penalties

Different taxes have different rules regarding surcharges and penalties for late payment. This includes when the surcharges / penalties are payable and how the surcharge / penalty amount is calculated.

Section 108 of the Finance Act 2009 introduced legislation that allowed suspension of penalties for late payment in certain circumstances.

Penalties covered by the legislation

Tax Penalty
Income tax or capital gains tax (tax year 2009-10 and prior) Surcharge under section 59C(2) or (3) of TMA 1970
Income tax or capital gains tax (tax year 2010-11 onwards) Sch 56 FA2009
Value added tax Surcharge under section 59(4) or 59(4) of VATA 1994
Aggregates Levy Penalty interest under paragraph 5 of Schedule 5 to FA 2001
Climate change levy Penalty interest under paragraph 82 of schedule 6 to FA2000
Landfill tax Penalty interest under paragraph 27(2) of schedule 5 to FA 1996
Insurance premium tax Penalty under paragraph 15(2) or (3) Schedule 7 to FA 1994 which is payable by virtue of paragraph 15 (1) (a) of that schedule
Any duty or excise Penalty under section 9(2) or (3) of FA 1994 which is imposed for failure to pay an amount of any duty of excise or an amount payable on account of any such duty

Conditions required for a suspension

In order for any of the penalties above to be suspended when payment is made late customers must satisfy all of the following conditions

  • they must approach us before they become liable for the penalty
  • we must agree to a time to pay arrangement
  • the customer must adhere to the arrangement and comply with any conditions of the arrangement.