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HMRC internal manual

Self Assessment: the legal framework

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HM Revenue & Customs
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Self Assessment for partnerships: sanctions against failure to file a partnership Tax Return: returns for 2009-10 and earlier

Background

This page describes the financial penalties for failing to file a partnership tax return on time for the tax year 2009-10 and any earlier tax year. The relevant legislation is in the Taxes Management Act 1970.

SALF506A describes the penalties for failing to file a partnership tax return on time for the tax year 2010-11 and any subsequent tax year. The relevant legislation is in Schedule 55 Finance Act 2009.

The rules on this page apply to all partnership tax returns for 2009-10 and earlier years irrespective of when the notice to make the return was issued.

Penalties for failure to file a partnership tax return on time

Section 93A(1)

As with personal tax returns there are both fixed and daily penalties for a failure to file a partnership return. If the time limits for filing of the tax return are not met fixed penalties automatically arise, and, in more substantial cases additional daily penalties are sought.

Fixed penalties

Section 93A(2)

The initial penalty is fixed at £100 for each partner who was a member of the partnership during the period covered by the tax return and is charged on individual partners, not the partnership. This penalty applies if the partnership tax return is not filed within a day of the date (the filing date) specified in the notice to file (see the second paragraph in SALF208).

Section 93A(4)

If the tax return is still outstanding six months after the filing date there is a further penalty of £100 per partner unless an officer of the Board has already applied to the tribunal for a daily penalty.

Both these fixed penalties are determined by an officer of the Board (Section 100). There is no provision for these fixed penalties to be restricted where the tax due on partnership profits is minimal.

Appeals against the determination of a fixed penalty

Section 93A(6) & (7)

Any appeal against the determination of a fixed penalty must be made by the nominated partner on behalf of all the partners concerned. Any such appeal is treated as a composite appeal against each individual penalty and the nominated partner is treated as if he or she were the partner liable to each penalty.

The tribunal can only set the penalty aside if the nominated partner had a reasonable excuse for the failure that occurred during the period between the filing date and the submission of the partnership tax return. Any such reasonable excuse must apply for the whole period of delay. It is not sufficient for there to have been a reasonable excuse for part of the period.

Daily penalties in more substantial cases

Section 93A(3)

In addition to the fixed penalties a daily penalty of up to £60 per relevant partner, per day, may be imposed if leave is given by the tribunal (although if any such penalty is applied for within six months of the filing date the second fixed penalty no longer applies).

The daily penalties apply for each day on which the failure continues following issue of the notice of the direction by the tribunal that they are to apply. Again the penalties are charged on individual partners not the partnership.

Section 93A(5)

No daily penalty can be imposed once the tax return has been filed.

Appeals against daily penalties

Section 93A(6)

The partnership has the normal right of appeal against the determination of a daily penalty, but again any such appeal must be made by the nominated partner, and is treated as a composite appeal made on behalf of all the relevant partners.

Tax-geared penalties can only be determined on individual partners

Where a partner fails to file a personal tax return on time, and the partnership tax return is also late, that partner is liable to two sets of fixed penalties. There is no tax-geared penalty within Section 93A because the partnership is not liable for any of the tax on partnership profits. Where an individual partner’s tax return is late the tax on the partner’s share of the partnership income will be included in the calculation of any penalty chargeable on the partner under Section 93(5) (see Tax-geared penalties may be determined in serious cases of delay in SALF208).