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HMRC internal manual

Self Assessment Manual

From
HM Revenue & Customs
Updated
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Interest, penalties and surcharge: penalties: effects of unlogging a return

From 6 April 2012, when a return is unlogged, any penalties relating to the filing of that return are revisited. The information in subject ‘Unlogging captured returns’ (SAM121640) should be followed in respect of unlogging a return. The impacts in respect of the different penalty types are shown below.

Late filing fixed penalty and daily penalties

Depending on whether a penalty(s) has been charged because a paper return has been filed late or an online return has been filed late, the penalty(s) may be cancelled automatically.

Where a penalty(s) has been raised because a paper return has been filed late and the return unlogged before the date that a penalty would be charged for an online return, the penalty is cancelled by the system. The system will automatically review the case each week and will raise a new penalty(s), if applicable, if the return is not received by the due date.

If a penalty(s) has been raised because the return was received online after the online return due date, the penalty(s) will remain in place because the penalty(s) is still due.

A late filing fixed penalty charged because a paper return has been filed late can be identified because the penalty creation date as shown on VIEW STATEMENT is on, or before, the online return due date.

A late filing daily penalty, charged because the paper return has been filed late, can be identified where the penalty creation date as shown on VIEW STATEMENT is prior to the online return due date (usually 31 January) plus 3 months plus 90 days.

Note: If a penalty is cancelled by the system as a result of a return being unlogged, the cancelled penalty will not appear on the VIEW/CANCEL PENALTY screen.

More information about late filing fixed penalties can be found at SAM61220 onwards.

More information about late filing daily penalties can be found at SAM61230.

Late filing (tax geared) penalties

Late filing (tax geared) penalties are raised where a return is either received late, or is still outstanding, after the end of 6 months and 12 months, after the due date. The 6 month and 12 months penalties are charged at either the minimum of £300 where the return is not received, or (if higher) 5 per cent of the amount of tax due for the year if the return has been received, or if there is an determination. More information about late filing (tax geared) penalties can be found at SAM61240.

Dependent on whether the penalty(s) has been charged because a paper return has been filed late or an online return has been filed late, the penalty(s) may be cancelled automatically.

Where the penalty(s) has been raised because a paper return has been filed late, and the return is unlogged before the date that a penalty would be charged for an online return, that penalty(s) is cancelled by the system. The system will automatically review the case each week and will raise a new penalty(s), if applicable, if the return is not received by the due date.

Where the penalty(s) has been raised because an online return has been filed late, if the return is unlogged, that penalty(s) is review by the system and is reduced (if applicable) to the minimum of £300. If, for example, a 6 month late filing (tax geared) penalty exists for £1200 and the return is unlogged, the penalty will be reduced to the minimum charge of £300.

If, however, a return is unlogged which reinstates a determination, the penalty position is reviewed by the system to bring the penalties in line with those due based on the determination. For example

  • A determination is created with a liability of £10,000 which results in a 6 month late filing (tax geared) penalty being charged of £500 (£10,000 x 5 per cent)
  • A return is then captured with a liability of £8,000 which results in the 6 month late filing (tax geared) penalty being reduced to £400 (£8,000 x 5 per cent)
  • The return is unlogged which means that the penalty should be £500 (based on the determination £1000 x 5 per cent) so the reduced £400 penalty remains as is and a new 6 month late filing (tax geared) penalty is raised for £100 ( the due date of the new penalty is 30 days after issue)

Note: If a penalty is cancelled by the system as a result of a return being unlogged, the cancelled penalty will not appear on the VIEW/CANCEL PENALTY screen.

A late filing (tax geared) penalty charged because a paper return has been filed late can be identified because the penalty creation date as shown on VIEW STATEMENT is on, or before, the online return due date plus 6 months or 12 months.

Late payment penalties

A first late payment penalty is raised where the tax is unpaid 30 days after the due date, a second penalty is created where the tax unpaid 30 days plus 5 months after the due date, and a third penalty is created where tax is unpaid 30 days plus 11 months after the due date. The penalties are charged at 5 per cent of the amount of tax unpaid. More information about late payment penalties can be found at SAM61250.

If the return is unlogged, the late payment penalty(s) will be cancelled. However, if the unlogging of the return reinstates a determination, the penalty position is reviewed by the system to bring the penalties in line with those due based on the determination.

Note: If a penalty is cancelled by the system as a result of a return being unlogged, the cancelled penalty will not appear on the VIEW/CANCEL PENALTY screen.

Example

A determination is created with a liability of £12000, all of which is unpaid 30 days after the due date.

A first late penalty is charged of £600 (£12,000 x 5 per cent).

A return is then captured with a liability of £10,500 which results in the first late payment penalty being reduced to £525 (£10,500 x 5 per cent).

The return is unlogged which means that the penalty should be £600 (based on the determination £12,000 x 5 per cent) so the reduced £525 penalty remains ‘as is’ and a new first late payment penalty is raised for £75 (the due date of the new penalty is 30 days after issue).