MTT55420 - Administration: Compliance: Penalties: Failure to register

If a group becomes a qualifying group, the filing member is obliged to register with HMRC (see MTT51400). If it fails to meet this obligation within the time limit, it will be liable to a penalty under Schedule 41 of Finance Act 2008.

The filing member will have a 30-day notice period to pay the penalty from the point at which the penalty is raised.

This is set out in paragraph 41, schedule 14 to Finance (No.2) Act 2023.

The Compliance Handbook (CH70000) has further details regarding failure to notify penalties:

  • see CH72000 for guidance on how to determine the type of failure to notify.
  • see CH72500 for guidance on how to calculate the penalty.
  • see CH74000 for guidance on how to process the penalty.
  • see CH74500 and MTT55520 for guidance on how to deal with an appeal to the penalty.

Reasonable excuse

The filing member will not be liable to a failure to register penalty if they have a reasonable excuse for not registering with us at the appropriate time, provided that they did so without unreasonable delay after the excuse had ended (see CH160000).

Behaviours

Penalties under Schedule 41 are designed to address the behaviour that caused the failure. The more serious the behaviour, the higher the possible amount of the penalty. There are three types of behaviour:

  • deliberate and concealed,
  • deliberate but not concealed,
  • non-deliberate.

The penalty payable is capped depending on the seriousness of the behaviour:

  • for deliberate and concealed behaviour, the cap is 100% of the potential lost revenue.
  • for deliberate but not concealed behaviour, the cap is 70% of the potential lost revenue.
  • for any other case, the cap is 30% of the potential lost revenue.

Potential lost revenue is the amount of tax payable by members of the group for the accounting period which, by reason of the failure to register, remains unpaid by those members at the payment date. This aligns with the filing date (see MTT53000).