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HMRC internal manual

PAYE Manual

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HM Revenue & Customs
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Employer returns: employer EOY penalties: duty geared penalties

Duty-geared penalties are the penalties charged under TMA70/Section 98A(2)(b) where the return is outstanding more than 12 months after the due date.

All duty-geared penalties are Type 5.

ECS will not automatically calculate and issue duty-geared penalties. Instead, when returns are received you should refer the papers to Central Policy: Tax Administration Advice, Queens Dock, Liverpool (Employer Compliance) who will on receipt of the papers

  • Consider whether based on the facts of the case a duty-geared penalty is appropriate

And

  • Determine the amount of any duty-geared penalty due

These penalties can be determined without prejudice to any interim penalties already issued. The remainder of this subject is presented as follows

 

Review of cases from ECS Exceptions Lists

At regular intervals (at least quarterly), ECS penalty officers should review the ‘Over 1 year late’ cases, within the End of Year Exceptions List to establish which cases are suitable for selection.

End of year Exceptions Lists are accessed through the ‘Special Functions’ icon.

Bear in mind that the majority of new cases will populate the lists shortly after 20 May each year.

Suitable cases

Duty-geared penalties are not imposed automatically, only in suitable cases.

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Culpable amounts for late returns are the total of identified payments made after 19 April following the return year and estimated outstanding payments still to be made.

Abatement is where the maximum statutory penalty is reduced for such reasons as Disclosure, Co-operation and seriousness to arrive at the appropriate amount.

Suggested actions to determine cases suitable for referral to Central Policy: Tax Administration Advice, Queens Dock, Liverpool (Employer Compliance) are

  • Check EBS Function VIEW BROCS for each tax year to identify any payments made after 19 April following the return year for outstanding forms P35 / CIS36 / SC35
  • Identify those cases where there is good reason to believe that duty still remains unpaid by comparing to amounts paid for previous years
  • Use any other information to hand, for example the employer’s PAYE file or recent company / business accounts which may contain details of remuneration or details of employees in receipt of taxable benefits
  • Separate those cases where the estimated culpable duties are less than £5,000 and those where they are £5,000 or more

Cases with less than £5,000 duties late / unpaid

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Cases with £5,000 or more duties late / unpaid

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Submission to Central Policy: Tax Administration Advice, Queens Dock, Liverpool (Employer Compliance)

If the return remains outstanding despite Recovery Office attempts to obtain it, the Employer Office

  • Should advise Central Policy: Tax Administration Advice, Queens Dock, Liverpool (Employer Compliance)
  • Should not send any other papers or files unless requested to do so

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Authorised Number

Central Policy: Tax Administration Advice, Queens Dock, Liverpool (Employer Compliance) will consider the facts relevant to each case and decide whether to recommend imposing a duty-geared penalty on the employer / contractor. If Central Policy: Tax Administration Advice Queens Dock, Liverpool (Employer Compliance) recommend that a duty-geared penalty is appropriate, they will inform you of

  • The penalty amount
  • The Authorised Number

The Authorised Number will be specific to each individual penalty. It will comprise of five numerals, followed by a forward slash, then two numerals relating to the account year the penalty was authorised in, for example, 00001/02 is penalty number one of Account 2002.

Note: You should not attempt to issue a duty-geared penalty under any circumstances without prior authorisation from Central Policy: Tax Administration Advice Queens Dock, Liverpool (Employer Compliance).