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HMRC internal manual

Employment Related Securities Manual

Reporting requirements - Form 42

Failure to make a reportIf a “responsible person” fails to make a report then penalties can arise.

Penalties are not imposed automatically and in any case where we intend to seek penalties the company is warned of their failure to make a report on a minimum of two occasions before the case is referred to the tribunal. All the facts and the company’s explanation, if received, are considered before a decision is made whether to proceed and, of course, the tribunal may decide not to award penalties.

Where there is more than one person responsible for making a report they should agree between themselves who should make that report. Where one person agrees to make the report and then fails to do so we will consider all the facts and circumstances before making a decision on whether to proceed.

Penalties can arise under either or both of the following in relation to a failure:

  • by a “responsible person” to provide information of reportable events before 7 July following the end of the tax year. Penalties may be imposed on each “responsible person”. Where information of reportable events is not provided to HMRC by one of the four “responsible persons” before 7 July following the end of the tax year, then penalty proceedings can be taken against each of them. The tribunal can award an initial penalty of up to £300 for each reportable event against each “responsible person”. Where the information remains outstanding after the award of the initial penalty, further penalties may be awarded, not exceeding £60 per day, against each “responsible person” for each day the information remains outstanding.

  • to comply with the notice to make a “ return”. If a “ return” has been issued and remains outstanding at the date of the tribunal hearing, an initial penalty of up to £300 may be imposed against the person to whom the notice was sent. Where the return remains outstanding after the award of the initial penalty, further penalties may be awarded, not exceeding £60 for each day the return remains outstanding. It is important to remember penalties can arise under one or both of the above bullet points. The first relates to a failure to meet a statutory deadline to provide information; the second relates to failure to comply with a notice issued by HMRC.

These penalty provisions will not affect the large number of companies who continue to provide information or returns within the time allowed. But they should encourage companies who previously failed to provide that information to comply with their statutory obligations.

If companies have difficulty in completing their forms, or want to discuss how they can meet their statutory obligations, they should contact the Compliance Manager at ESSU – see ERSM10040 for contact details.