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HMRC internal manual

Enquiry Manual

Penalties: Failure to Make a Return for Pre-SA Years: Tax Geared Penalties - Amount

TMA70/S93(2) (old)

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.

Where the extended delay in submitting the return has led to delay in payment, the maximum penalty used in computations is the amount of tax and NIC which is charged in assessments made (or which could be made)

  • after 5 April in the year of assessment following that in which the return was served, and
  • based wholly or partly on income or gains which should have been included in the particular return.

For returns issued after 6 April 1989 it is made clear that the maximum culpable tax for penalty purposes is specifically limited to that which is attributable to the late returned income or gains.

No Section 93 penalty should be claimed in respect of Class 4 NIC based on a late return for a year before 1987/88.

Tax included in a Schedule E assessment should be excluded from the penalty computation to the extent that it is covered by tax deducted in that year under PAYE. The same practice should be applied to tax deducted under the subcontractor scheme. It follows that there will be no penalty, since there has been no loss of tax, where the liability is wholly covered by tax deducted during the year.

Where the return is a partnership return, the tax and NIC to be included in the penalty computation are tax and NIC assessed or assessable on the partnership. In the case of an individual partner’s return, the penalty computation can only include tax and NIC on income (as well as Capital Gains Tax) which enters into the computation of that partner’s total income.