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HMRC internal manual

Self Assessment Manual

From
HM Revenue & Customs
Updated
, see all updates

Interest, penalties and surcharge: penalties: fixed automatic penalties: automatic imposition of

This guidance refers to tax returns received for 2009-10 and earlier. For further information regarding the new rules for the tax years 2010-11 and later, see SAM61200 onwards.

General

The filing date for a tax return is usually

  • 31 October for paper returns

And

  • 31 January for online returns and for those customers who are unable to file online for technical or operational reasons

For years up to 2006-07, the filing date was usually 31 January.

Where a taxpayer fails to file his / her return by the filing date, the SA computer will automatically impose fixed penalties; but only where the year of liability of the return (tax year) ended in the previous calendar year. For example during the calendar year 1 January 2010 to 31 December 2010 fixed automatic penalties will be imposed for 2008-09 tax returns (tax year ending 5 April 2009). Once 1 January 2011 is reached penalties are no longer automatically imposed for 2008-09 returns, the automatic process switches to the following year’s tax returns 2009-10 (tax year ending 5 April 2010).

Fixed Automatic Penalties will not be imposed where the year of liability (tax year) ends in the previous calendar year but the return is issued late, and the due date of the return is later than 31 December of the current calendar year. For example 2008-09 return issued on 24 September 2010 will have a due date of 3 months and 7 days later which is 1 January 2011, a fixed automatic penalty will not be automatically imposed if the return is received late. Where this applies you will need to take clerical action to ensure that any penalty is correctly charged. (See subject ‘Fixed Automatic Penalty: Late Issued Returns’ (SAM61050)).

Note: In these circumstances, you should check whether a deferred filing date has been set, and passed, before proceeding to charge a penalty.

Fixed penalties for earlier years will need to be charged online by the operator. (See subject ‘Fixed Automatic Penalty Record: Amending the’ (SAM61030)).

Fixed automatic penalties are charged in 2 phases

  • First fixed automatic penalty - the first fixed automatic penalty of £100 will be charged and put on the taxpayer’s record where the return was not received by the due filing date (31 October for paper returns or 31 January for online returns and paper returns that cannot be filed online for operational or technical reasons). In the case of a partnership return £100 will be charged to each partner
  • Second fixed automatic penalty - the second fixed automatic penalty of £100 (making £200 in all), will be charged and put on the taxpayer’s record where the return has still not been filed 6 months after the 31 January following the end of the tax year. (This includes paper returns due to be filed on 31 October, legislation s.93(4) TMA1970 & s.93(10) TMA1970 applies.) This means that the earliest date a second fixed automatic penalty can be charged in any late return case, is 1 August after the 31 January following the end of the tax return year

Note: A paper return received on 1 November (unless found in the post box when it is first opened that day, in which case it is considered as having been received on 31 October), and a return filed online up to midnight on 1 February, is late. However, a fixed penalty will not be charged. (The decision on whether a paper return is to be considered as late or not depends each year on whether the 31 October, or the 1 and 2 November, fall on a weekend). There is no concession for the second fixed penalty.

However, the case will not be selected for fixed automatic penalties if the taxpayer is subject to

  • Bankruptcy

Or

  • To an individual Voluntary Arrangement

Where an application for daily penalties has been made to Tribunal (see subject ‘Daily Penalties: Procedures for Applying’ (SAM61090)) in the 6 month period from the filing date to the due date for the second fixed automatic penalty, the second fixed automatic penalty will not be charged. In addition, if the first penalty has not yet been entered on the record this will not be charged.

If a return is outstanding and the address on the taxpayer record is RLS the computer will select the case for fixed automatic penalties, but it will not issue the penalty notice or place the charge on the taxpayer’s record until the RLS status is cleared.

The penalty charge will be added to the ‘Outstanding Debt and/or Return’ Work List after 35 days.

Penalties for earlier years

The SA system will only impose fixed automatic penalties for the year of liability ended in the previous calendar year. Fixed automatic penalties for earlier years will need to be charged online by the operator. (See subject ‘Fixed Automatic Penalty Record: Amending the’ (SAM61030).

Issue of penalty notice

Where a fixed automatic penalty is imposed a notice, form SA326 Penalty for a late tax return, will be issued to the taxpayer and a copy will be sent to the taxpayer’s agent where the 64-8 signal is set. In partnership cases form SA328 Penalty for a late partnership return is sent to each partner.

Enclosed with the notice will be a leaflet (SA355 for individuals / trustees or SA356 for partnerships) explaining the fixed automatic penalty.

Due date for payment

Fixed automatic penalties have a payment due date of 30 days after the issue of the notice. But for operational reasons, where the penalty remains unpaid the debt will not appear on the ‘Outstanding Debt and/or Return’ Work List until after 35 days after the date the charge was created on the taxpayer’s record.

Interest

Interest is chargeable on fixed automatic penalties from 30 days after the date of the issue of the notice.

Partnership cases

In partnership cases, all partners will be charged a fixed automatic penalty if the partnership return is not filed by the filing date. If the return has not been filed after 6 months following the filing date a second fixed automatic penalty will be charged.

If the partnership is bankrupt then a fixed automatic penalty will be raised on those partners who are not individually bankrupt.

If an individual was a member of a partnership in a particular year but you did not identify him as such until after the imposition of fixed automatic penalties for that year see subject ‘Set Up Partner’ (SAM100230) for further guidance.