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HMRC internal manual

Senior Accounting Officer Guidance

Assessing a penalty: penalty involving time limits - Example 2

Margaret is a Customer Compliance Manager (CCM) who takes up various issues with a qualifying private limited company. On 13 October 2020 the company’s representatives tell Margaret that a substantial amount of entertaining expenditure has been included in the travel and subsistence expenses debit in the company’s profit and loss account and thus wrongly claimed for tax relief.

The problem arises from miscoding in the accounting system. This miscoding affects the years ended 30 September 2010 to 30 September 2017.

Margaret notes that the company and its SAO submitted the respective notifications and certificates for each year on time. The SAO certificates were all unqualified. Margaret contends that the certificates were carelessly inaccurate. (There is also a tenable view that the SAO had failed in the main duty.)

The penalty position as at 13 October 2020 would be

Year ended Filing date Inaccuracy comes to Margaret’s attention on Penalty to be assessed by Legislation Schedule 46 FAO9
30/09/2010 30/06/2011 13/10/2020 30/06/2017 Para9(2)(b)
30/09/2011 30/06/2012 13/10/2020 30/06/2018 Para9(2)(b)
30/09/2012 30/06/2013 13/10/2020 30/06/2019 Para9(2)(b)
30/09/2013 30/06/2014 13/10/2020 30/06/2020 Para9(2)(b)
30/09/2014 30/06/2015 13/10/2020 12/04/2021 Para9(2)(a)
30/09/2015 30/06/2016 13/10/2020 12/04/2021 Para9(2)(a)
30/09/2016 30/06/2017 13/10/2020 12/04/2021 Para9(2)(a)
30/09/2017 30/06/2018 13/10/2020 12/04/2021 Para9(2)(a)

Years to 30 September 2013 are already out of date and so no penalty can be assessed for those years. The remaining years would attract an SAO inaccuracy penalty provided the assessments are made on or before 12 April 2021.

Mid-sized businesses do not have a CCM. For the definition of a Mid-sized business, see SAOG05010. For Mid-sized businesses, the Mid-Sized Business Customer Engagement Team (CET) or a Caseworker would assess the penalty in the above example.