Types of penalties: Geared penalties
A geared penalty is based on the amount of duty arrears involved, set as a percentage in law of (5%).
However if the resulting amount is less than £250, the penalty to be assessed is £250. Finance Act 1994 Section 9(2)(a) refers to this provision.
What attracts a geared penalty?
Anyone who fails to pay duty by the due date, renders themselves liable to a penalty under Section 9(2)(a) of the Finance Act 1994 (subject to reasonable excuse), as provided for by subsection (4)(a) of the same Act.