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HMRC internal manual

Self Assessment: the legal framework

Sanctions against a failure to file a partnership Tax Return: penalties for failure to file a Return on time: returns for 2010-11 onwards


This page describes the financial 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.

SALF506 describes the penalties for failing to file a partnership tax return on time for the tax year 2009-10 and any earlier tax year. The rules set out in SALF506 apply to all returns for 2009-10 and earlier years irrespective of when the notice to make the return was issued.

Schedule 55 FA 2009

Paragraph 25(1) and (2)

This provides for a penalty to be payable by every “relevant partner” in respect of the failure of the “representative partner or their successor” to file a partnership return on time.

Paragraph 25(6)

A “relevant partner” is a person who was a partner in the partnership to which the return relates at any time during the period in respect of which the return was required. The “representative partner” is the person required to file the partnership return referred to as the nominated partner in this guidance.

All penalties charged automatically

Paragraph 3 - Initial fixed penalty - one day late

Where the nominated partner fails to file the partnership return by the filing date, every relevant partner is liable to an initial fixed penalty of £100 on the penalty date. The penalty date is the day after the filing date (paragraph 1(4)).

Paragraph 4 - Daily penalties - three months late

Daily penalties apply if the failure to file the partnership return continues after the end of the period of three months beginning with the penalty date. The legislation provides for HMRC to decide that a daily penalty should be payable and to give notice to each relevant partner specifying the date from which the penalty is payable. The daily penalty is £10 for each day that the failure continues during the period of 90 days beginning with the date specified in the notice given to each relevant partner.

Paragraphs 5 and 6 - Further penalties - six months and 12 months late

If the failure to file the partnership return continues six months after the penalty date, there is a further penalty under paragraph 5. As a partnership does not have a tax liability, the statutory tax-geared percentage cannot apply so each relevant partner will be liable to the minimum penalty of £300.

Under paragraph 6, each relevant partner will also be liable to the minimum penalty of £300 if the failure continues 12 months after the penalty date.

The increased paragraph 6 penalty for deliberately withholding information does not apply to the partnership return. This is because the higher penalty is based on the liability that would have been shown in the return.

Special Reduction

Paragraph 16

If HMRC think it right because of “special circumstances”, they may reduce any late filing penalty. For this purpose, a special circumstance does not include ability to pay or the fact that a potential loss of revenue from one taxpayer is balanced by a potential overpayment from another.

For guidance on special reduction, see the Compliance Handbook.


Paragraph 20

An appeal under paragraph 20 in connection with a penalty for failing to file a partnership return on time may be brought only by the nominated (representative) partner or their successor. Any such appeal is treated as a composite appeal made on behalf of all the relevant partners and the nominated partner is treated as if he or she were the partner liable to each penalty. The nominated partner can appeal against HMRC’s decision that a penalty is payable and / or against the amount of the penalty payable.

Paragraph 21

There is no obligation to pay the penalty before an appeal against the assessment of the penalty is determined.

Paragraph 22

On appeal, the First-tier Tribunal may affirm or cancel HMRC’s decision or substitute for HMRC’s decision another decision that HMRC had power to make. This includes consideration of HMRC’s decision on special reduction.

Reasonable excuse

Paragraph 23

Under paragraph 23, liability to a penalty for failing to make a return does not arise where the nominated partner satisfies HMRC or (on appeal) the First-tier Tribunal or Upper Tribunal, that there is a reasonable excuse for the failure. For this purpose:

  • an insufficiency of funds is not a reasonable excuse unless attributable to events outside the nominated partner’s control
  • reliance on any other person to do anything is not a reasonable excuse unless the nominated partner took reasonable care to avoid the failure
  • where the nominated partner had a reasonable excuse but that excuse has ceased, they are treated as having continued to have the excuse if the failure is remedied without unreasonable delay after the excuse ceased