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HMRC internal manual

Oil Taxation Manual

PRT: penalties - time limits for penalties

Proceedings for fixed penalties may be commenced at any time up to six years from when the penalty was incurred (TMA70\S103(4)).

Proceedings for tax-geared penalties (TMA70\S103(1)) may be commenced at the later of:

  • any time up to six years from when the penalty was incurred, or
  • any time up to three years from when the tax, by reference to which the amount of the penalty is to be ascertained, was finally determined

Where a tax-geared penalty arises from an incorrect claim, the tax is finally determined when the relevant assessment has become final. If the incorrect claim has been allowed, HMRC will normally issue a Notice of Variation as soon as the correct allowable amount has been agreed. When that Notice becomes final, either after thirty days without appeal against the Notice or on determination of such an appeal, an amended decision notice will be issued to the claimant.

If the decision on the incorrect claim has been used in an assessment the tax specialist will decide, after the Notice becomes final, when to issue an amended decision notice, and, following that, when to issue an amendment of the assessment (or loss determination) under OTA1975\SCH2\PARA12. When that amendment is issued, tax specialist will formally notify the claimant that the issue of the amendment does not finally determine the tax due for the period.