EM4605 - Penalties: Failure to Make a Return for Pre-SA Years: Apportioned Accounts
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.
A single tax return can provide the figures for assessment for up to 3 years and the tax and NIC figures for all 3 years will enter into the penalty computation. There can, however, be difficulties where profits have to be apportioned.
A shopkeeper commenced trading on 1 January 1985 and ceased on 31 December 1989. Returns were issued and completed (that is, the supporting accounts were submitted) as follows.
| Accounts to | Return | Issued | Completed |
|---|---|---|---|
| 31/12/85 | 1986/87 | 6/4/86 | 30/4/88 |
| 31/12/86 | 1987/88 | 6/4/87 | 30/4/88 |
| 31/12/87 | 1988/89 | 6/4/88 | 31/8/88 |
| 31/12/88 | 1989/90 | 6/4/89 | 30/9/89 |
| 31/12/89 | 1990/91 | 6/4/90 | 31/7/92 |
Assessments
| Year | Date Made | Appeal? | Comment |
|---|---|---|---|
| 1984/85 | September 1986 | No Appeal | Inadequate |
| 1985/86 | September 1986 | No Appeal | Inadequate |
| 1986/87 | September 1986 | No Appeal | Inadequate |
| 1987/88 | September 1987 | Appeal | Determined |
| 1988/89 | October 1988 | - | Based on Accounts |
| 1989/90 | November 1989 | - | Based on Accounts |
| 1990/91 | October 1990 | Appeal | Ceased |
The 1986/87 return was late enough to support a TMA70/S93(2) penalty. On the normal basis of assessment the penalty would include the additional Income Tax (not NIC EM4603) for 1984/85 to 1986/87. In the event of a claim under ICTA88/S62 (now ITTOIA05/S214 - S216), the 1985 accounts would provide the figure for 1984/85 and part of the profit for 1985/86. The additional tax for these two years only would enter into the penalty computation.
The 1990/91 return was also late enough for a TMA70/S93(2) penalty. If the 1989/90 assessment had to be increased by further assessment, the additional tax and NIC would be included in the penalty computation. If, under ICTA88/S63 (now ITTOIA05/S202), there was a further assessment for 1988/89, the tax and NIC would be included in the penalty computation. Whatever the final basis of assessment for 1987/88, it would not include any of the 1989 profit and would not enter into the penalty computation.
In each case of this type you will have to set out the basis periods, as finally determined, and decide which assessments are wholly or partly dependent on the excessively late return.