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HMRC internal manual

Self Assessment Manual

From
HM Revenue & Customs
Updated
, see all updates

Interest, penalties and surcharge: penalties: late filing (tax geared) penalties for 2010-11 returns onwards

General

The filing date for a return is usually

  • 31 October for paper returns

Or

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

If the return is not filed 6 months after the return due date, a late filing (tax geared) penalty will be imposed automatically. However, if the return is received after six months (logged) but is not yet captured, the penalty will not be issued until after the return has been captured.

The penalty will be the greater of

  • £300

Or

  • 5 per cent of the amount of the tax due from a determination (if return not received)

Or

  • 5 per cent of the amount of tax shown in the return or the amended return (if return/amended return received)

This will be shown on the statement of account as ‘6 month late filing penalty for yy/yy’.

Similarly, if the return is not filed 12 months after the return due date, a late filing (tax geared) penalty will be imposed automatically. However, if the return is received (logged) after 12 months after the return due date but is not yet captured, the penalty will not be issued until after the return has been captured.

The penalty will be the greater of

  • £300

Or

  • 5 per cent of the amount of the tax due from a determination (if return not received)

Or

  • 5 per cent of the amount of tax shown in the return or the amended return (if return/amended return received

This will be shown on the statement of account as ‘12 month late filing penalty for yy/yy’.

If a late filing (tax geared) penalty is raised for £300 and the return is then filed, or a determination raised, the penalty position is reviewed. Based on the amount of tax due from the return, or determination, the penalty could increase but the penalty will never be amended below £300. If the amount due means that the penalty should be higher, a further penalty will be issued for the additional amount.(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Example

Return is due 31 January and not received by 31 July so a penalty of £300 is raised in August.

The return is received in September and shows tax due of £10,000. A further penalty of £200 is therefore raised in September.

£10,000 x 5%  
Less already charged £500
£300  
   
Further penalty £200

Issue of notice of penalty assessment

Where a late filing (tax geared) penalty is imposed, form SA370 notice of penalty assessment, which includes a payslip, will be issued to the customer and a copy will be sent to the customer’s agent where the 64-8 signal is set. Enclosed with the notice of penalty assessment will be leaflet SA370 Notes, this will not be sent with the agents copy.

In partnership cases, form SA371 notice of penalty assessment, which includes a payslip, will be issued to each partner and a copy will be sent to the partner’s agent where the 64-8 signal is set. Enclosed with the notice of penalty assessment will be leaflet SA371 Notes. This will not be sent with the agent’s copy.

Forms SA370/371 are flexible notices of penalty assessment that can be used to cover more than one penalty, if being selected by the system at the same time. For example, if a late filing (tax geared) penalty is selected at the same time as a daily penalty and a late payment penalty, they will all be shown on the same notice of penalty assessment.

An appeal can be made within 30 days from the date of issue of the penalty assessment. An extra 7 days, over and above the 30 days described in the legislation, are allowed for printing and despatch.

Automatic imposition

From April 2012, the system will automatically apply the late filing (tax geared) penalties for late 2010-11 returns each week. Over time the system will be able to automatically apply late filing (tax geared) penalties for a maximum of 4 ‘in-date’ return years. For example, in 2014-15 the system can still automatically apply a late filing (tax geared) penalty for a late 2010-11 return.

The system will not automatically apply a late filing (tax geared) penalty if the customer is subject to

  • Bankruptcy

Or

  • An Individual Voluntary Arrangement

If the return is outstanding but the address on the record is RLS, the system will not issue a late filing (tax geared) penalty. However, once the RLS status is clear, the penalty will be issued when the next penalty run takes place. The only exception to this is if an up-to-date address is found but the penalty relates to a year prior to the four ‘in-date’ return years. The system is unable to issue the penalty and this will need to be issued clerically, see SAM61280.

Interest

Interest will be charged if the penalty is not paid within 30 days after the issue of the notice of penalty assessment.

Events impacting late filing penalties

Certain events have an impact in respect of a late filing (tax geared) penalty, for example

  • A penalty of £300 is raised because the return has not been received and the return is later received
  • A return can be received which replaces a determination
  • An amended return is processed
  • A remission is cancelled

If the impact is a reduction of the late filing (tax geared) penalty, the penalty will be reduced and will be reflected on the statement of account. A revised notice of penalty assessment will not be issued. Note: The system will not reduce a late filing (tax geared) penalty below the statutory minimum amount of £300. See SAM131026 for information about what financial transactions prompt the issue of a statement.

Where an Overpayment Relief claim has been made the Late Filing Tax Geared penalty will not be automatically reduced as the amount of tax shown in the return, on which the original penalty was calculated, will not have changed. In these cases, the penalty will need to be capped by remitting the relevant amount. For further information, see subject  `Claims made outside a return’ (SAM114070).

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

You should note that, in limited circumstances, the event could happen outside of the four ‘in-date’ tax years, for example an amendment for 2010-11 is processed during 2015-16 (the return was issued late and the amendment is in time), if reduced, the late filing (tax geared) penalty will be reduced automatically. However, if the amendment increases the liability, any further late filing (tax geared) penalty would need to be raised clerically by creating a miscellaneous penalty charge using the function CREATE RETURN CHARGE. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Penalty based on liability

Where there is liability from either a return or determination, this liability is used when calculating the amount of the penalty. The liability is calculated before any adjustments, so will include any of the following when calculating the amount of the penalty

  • Amounts stood over, either formally or informally
  • Amounts informally discharged
  • Any amount remitted

Partnership returns

Late filing penalties apply to partnerships where the partnership return is not received or is late. However, the penalty will be the statutory minimum amount of £300 in all cases. The penalty will be chargeable on each partner in the partnership.

These will be shown on the partner’s statement of account as ‘P’ship 6 month late filing penalty for yy/yy’ or ‘P’ship 12 month late filing penalty for yy/yy’.

Newly identified partners

If an individual is a member of a partnership in a particular year but they were not identified as such until after the late filing (tax geared) penalty has been charged on the partnership, you will need to apply the penalty clerically. You can do this by creating a miscellaneous penalty charge using CREATE SUNDRY CHARGE on the partner’s record.

You also need to consider whether you should manually raise a late filing fixed penalty (see SAM61220) or daily penalties (see SAM61230) dependent on when the partner is linked to the partnership and how late the partnership return is. If more than one penalty is chargeable then separate charges must be created. Note: You may also need to consider manually issuing daily penalty reminders, if daily penalties are accruing and a notice of penalty assessment has not been issued.

Failure to file a return - deliberately withholding information

HMRC can increase the late filing (tax geared) penalty charged at 12 months to take into account the customer’s behaviour. These penalties will be created by compliance staff and will not be shown on the SA record. Further information will be available in the Compliance Handbook from April 2012.