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HMRC internal manual

Enquiry Manual

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Penalties: Failure to Make a Return for SA Years: Appeals and Reasonable Excuse - Amounts

TMA70/S118(2)

TMA70/S93(8)

TMA70/S93(10)

Penalties under Schedule 55 FA09 for failure to file on time, see CH60000+, apply to income tax and capital gains tax returns for the year ended 5 April 2011 and later years. The returns for the year ended 5 April 2011 are those due to be filed on or before 31 October 2011, or 31 January 2012 if filed electronically.

This page is concerned principally with individual SA returns for the year ended 5 April 2010 and earlier, and S93. For partnership returns and S93A see also EM4585 - though you should be aware that there is no S93A over-12 months tax-geared penalty.

Continuing daily penalties, TMA70/S93(3) & Over-12 Months tax-geared penalty, TMA70/S93(5)

For either of these penalties, the normal provisions of TMA70/S118(2) apply. See EM5152 and EM5170-5173. The taxpayer will succeed on appeal (either in a review by HMRC or at the tribunal) and the penalty will be cancelled if they can show both 

  • that they had a reasonable excuse for their failure to file on time, and
  • that they remedied the failure without unreasonable delay thereafter.

Both these penalties are of the “maximum-amount” type. On appeal, therefore, the review officer (after consulting the Authorising Officer) or the tribunal can replace the authorised officer’s judgement of the “appropriate” level of penalty within the statutory maximum with their own. TMA70/S100B(2)(b), see EM4506.

Fixed automatic penalties, (£100 x 2), TMA70/S93(2) and (4)

For these penalties the SA legislation has its own provisions at TMA70/S93(8) & (10). The taxpayer will succeed on appeal and the penalty will be cancelled if they can show both 

  • that they had a reasonable excuse for their failure to deliver the return, and
  • that this excuse existed throughout the period of default.

For what amounts to a “reasonable excuse” see EM5152 and EM5170-5173.

The `period of default’ is the period beginning with the filing date and ending with the day before that on which the return was delivered. This wording means that no appeal can normally be considered until the return has been delivered because only then will we be able to establish the period of default. Unless therefore there is a continuing reasonable excuse, we cannot accept any appeal in advance of the delivery of the return.

That wording also produces a rather strange result. Because the normal filing date is midnight at the end of 31 January we have accepted that a reasonable excuse exists throughout that last day because the return is not actually late at any time on that day. Therefore, in practice we only charge the late filing penalty when the return is not received by the end of 1 February. In practice

  • returns received in a tax office post box when it is first opened on the morning of 1 February have been filed on time
  • returns received in a tax office post box during 1 February, and when it is first opened on 2 February, are late (and the enquiry window is extended to 30 April the following year) but they will not be charged the £100 fixed penalty
  • where we can tell when we receive returns in other ways, for example, by hand, courier or electronically, they are late after midnight on the night of 31 January/1 February but a penalty is only charged for receipt after midnight on the night of 1/2 February
  • the same approach applies to later filing dates where the return was issued after 31 October.

As regards amounts, these penalties are of the “fixed-amount” type. On appeal, the review officer (after consulting the Authorising Officer) or the tribunal, if not satisfied that the taxpayer had a reasonable excuse throughout the period of default, must confirm the penalty determination, S93(8). They have no discretion as to the amount, which has been fixed by Parliament. See EM4506.