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HMRC internal manual

Pensions Tax Manual

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HM Revenue & Customs
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Information and administration: essential principles: penalties for failing to comply with an information requirement or providing inaccurate information

Glossary PTM000001
   

 

Penalties for failure to provide information
Penalties for providing incorrect information
Failure to preserve documents
Provision of false statements or documents
Penalties in respect of information notices issued under Schedule 36 Finance Act 2008
Penalties in respect of the Accounting for Tax return (AFT)
Penalties in respect of the Pension Scheme Return (PSR)
Provision of inaccurate documents in relation to a requirement under the enhanced lifetime allowance regulations
Failure to comply with the enhanced lifetime allowance regulations
Failure to notify loss of enhanced protection due to relevant benefit accrual
Failure to notify loss of fixed protection, fixed protection 2014 or fixed protection 2016
Failure of a member with individual protection 2014 or 2016 to tell HMRC about a pension debit

 

Penalties for failure to provide information

Section 251(1)(a) and (4) Finance Act 2004

Section 98 Taxes Management Act 1970

Penalties under section 98 Taxes Management Act 1970 apply to any information requirements prescribed by regulations made under the powers at section 251(1)(a) or (4) Finance Act 2004. Regulations made under these powers include the regulations governing notification of fixed protection, fixed protection 2014 and individual protection 2014 and the Registered Pension Schemes (Provision of Information) Regulations 2006 - SI 2006/567.

Information requirements under SI 2006/267 include:

  • the Event Report - see PTM161000
  • notification of winding-up - see PTM168000
  • information in relation to the lifetime allowance - see PTM164000
  • provision of information when transferring crystallised benefits - see PTM109000
  • provision of information following the death of a member - see PTM165000
  • exchange of information about flexible access of pension rights - see PTM166000
  • notification of unauthorised borrowing - see PTM168000
  • reporting ceasing to be a scheme administrator - see PTM168000
  • information about benefits in kind - see PTM168000
  • members providing information about lump sums - see PTM160400
  • providing information following a request to transfer to a QROPS - see PTM103000
  • provision of information regarding National Insurance numbers - see PTM160400.

The person responsible for providing the required information may be liable to a penalty for failing to provide information on time. Failure to provide information on time covers both non provision and late provision. The penalties that may be due are:

  • a penalty of up to £300 for failure to provide the required information on time, and
  • where the initial failure to provide penalty has been levied and the information still hasn’t been provided further penalties may be due. These penalties can be up to daily penalties of up to £60 for every day that the failure to provide the required information continues.

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Penalties for providing incorrect information

Section 251(1)(a) and (4) Finance Act 2004

Section 98(2) Taxes Management Act 1970

Section 98 Taxes Management Act 1970 also provides for penalties where a person fraudulently or negligently provides any incorrect information, document, certificate, record or declaration. The penalty can be up to £3,000.

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Failure to preserve documents

Section 258(2) Finance Act 2004

Any person who fails to comply with the information preservation requirements, see PTM160200, can be liable to a penalty of up to £3,000.

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Provision of false statements or documents

Section 264 Finance Act 2004

Any person who fraudulently or negligently makes a false statement or representation may be liable to a penalty of up to £3,000 if as a result:

  • they, or any other person obtains relief from, or repayment of, tax chargeable under Part 4 Finance Act 2004
  • a scheme makes an unauthorised payment.

Any person who assists in or induces the preparation of a document that they know to be inaccurate that will or is likely to cause a scheme to make an unauthorised payment will be liable to a penalty of up to £3,000.

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Penalties in respect of information notices issued under Schedule 36 Finance Act 2008

The Compliance Handbook provides guidance on the penalties due for failure to comply with an information notice and providing inaccurate information. Guidance on these penalties starts at CH26200.

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Penalties in respect of the Accounting for Tax return (AFT)

Penalties in respect of the AFT fall into three categories:

  • failing to file the AFT on time - see PTM162100
  • providing inaccurate information on the AFT - see PTM162100, and
  • failure to pay the tax due on time - see PTM162300.

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Penalties in respect of the Pension Scheme Return (PSR)

Section 257 Finance Act 2004

PTM163000 provides guidance on the Pension Scheme Return and the penalties due for failing to file on time and providing inaccurate information on the return.

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Provision of inaccurate documents in relation to a requirement under the enhanced lifetime allowance regulations

Section 261 Finance Act 2004

The enhanced lifetime allowance regulations are The Registered Pension Schemes (Enhanced Lifetime Allowance) Regulations 2006 - SI 2006/131

An individual may be liable to a penalty if they fraudulently or negligently:

  • provide false information about lifetime allowance protection, or
  • produce or makes available an inaccurate document or certificate in connection with their lifetime allowance protection

and as a result their lifetime allowance or maximum pension commencement lump sum would be greater than it actually is.

The penalty can be an amount up to 25 per cent of:

  • the difference between the individual’s claimed lifetime allowance (based on the incorrect information etc. provided) and the higher of:

    • the member’s actual lifetime allowance, and
    • the standard lifetime allowance, plus
  • the difference between the individual’s pension commencement lump sum entitlement (based on the incorrect information etc. provided) and the actual amount of the individual’s pension commencement lump sum entitlement.

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Failure to comply with the enhanced lifetime allowance regulations

Section 262 Finance Act 2004

An individual may be liable to a penalty of up to £3,000 if they fail to produce any document, certificate or information required to be produced or provided by The Registered Pension Schemes (Enhanced Lifetime Allowance) Regulations 2006 - SI 2006/131.

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Failure to notify loss of enhanced protection due to relevant benefit accrual

Section 263 Finance Act 2004

If an individual fails to notify HMRC that they have lost enhanced protection due to relevant benefit accrual (see PTM092420) within 90 days will be liable to a penalty of up to £3,000.

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Failure to notify loss of fixed protection, fixed protection 2014 or fixed protection 2016

Regulation 9 The Registered Pension Schemes (Lifetime Allowance Transitional Protection) Regulations 2011 - SI 2011/1752

Regulation 9 The Registered Pension Schemes and Relieved Non-UK Pension Schemes (Lifetime Allowance Transitional Protection) (Notification) Regulations 2013 - SI 2013/1741

Paragraphs 17 and 20 Schedule 4 Finance Act 2016

Section 98 Taxes Management Act 1970

Individuals have 90 days in which to tell HMRC that they have lost protection. If they do not do this penalties are due in accordance with section 98 Taxes Management Act 1970. These penalties are described in the section ‘Penalties for failure to provide information’ above.

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Failure of a member with individual protection 2014 or 2016 to tell HMRC about a pension debit

Regulation 9 The Registered Pension Schemes and Relieved Non-UK Pension Schemes (Lifetime Allowance Transitional Protection) (Individual Protection 2014 Notification) Regulations 2014 - SI 2014/1842

Paragraphs 18 and 20 Schedule 4 Finance Act 2016

Section 98 Taxes Management Act 1970

Individuals have 60 days in which to tell HMRC about a pension debit. If they do not do this penalties are due in accordance with section 98 Taxes Management Act 1970. These penalties are described in the section ‘Penalties for failure to provide information’ above.