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HMRC internal manual

Enquiry Manual

Penalties: Failure to Notify Chargeability: 1995/6 and SA Years




For 1995/6 and subsequent years there is an obligation for any person who is chargeable to Income Tax (IT) or Capital Gains Tax (CGT) and who has not received a notice under Section 8 (or Section 8A in the case of trustees), to notify chargeability for any year of assessment within 6 months of the end of that year. Notice is to be given to an Officer of the Board.

There is no requirement to notify chargeability where there is no liability to IT or CGT or where sufficient tax has been deducted at source to meet the net liability for the year unless

  • the taxpayer is liable to pay tax at a rate that is higher than the rate at which any tax has been deduced at source, or
  • the taxpayer is liable to a High Income Child Benefit Charge (HICBC).

HMRC may withdraw a notice under Section 8A for 2012/13 and subsequent years if the person requests that we withdraw the notice to file because they do not have any income that requires an SA return to be filed. However, the person may be liable to penalties for failure to notify if we agree to withdraw the notice and we subsequently find out that they were liable to IT or CGT, see CH72700.

For CTSA there is an obligation for any company, which is chargeable to tax for an accounting period and that has not received a notice requiring a company tax return, to notify chargeability within 12 months from the end of that accounting period.

In addition, for accounting periods beginning on or after 22 July 2004, a company is required to notify when it first comes within the charge to CT, or comes back into charge after a period of dormancy, not later than 3 months after the accounting period began.

Employees with New Expenses or Benefits

It may be that, at the six month point, employees will be unsure whether information about new expenses or benefits for the previous tax year has been or will be taken into account by HMRC for PAYE. In practice, where

  • employees have received a copy of P11D information from their employer
  • they are satisfied that the information is correct and complete, and
  • they have no reason to believe that the P11D information has not been passed to the HMRC,

they will not be required to notify their chargeability on this account alone.

Amount of Penalty

For SA the penalty is based on the amount of net tax due but unpaid at 31 January following the tax year for which the liability arises. This means that, even if a taxpayer fails to notify chargeability by 5 October, there will be no penalty payable if all tax is paid in full by the following 31 January.

For CTSA the penalty is a sum not exceeding the amount of tax payable for the accounting period in question that remains unpaid 12 months after the end of the period.

Failure to comply with S55 may render a company liable to a penalty under S98 TMA70, see EM4901 for accounting periods ending before 31 March 2010. Although the obligation under S55 remains in place after this date there is no corresponding penalty because S98 was repealed with the introduction of penalties under FA08/Sch 41.  

All failure to notify penalties are subject to there being no ‘reasonable excuse’ for the failure, see EM5150+.