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HMRC internal manual

VAT Civil Penalties

HM Revenue & Customs
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Insurance Premium Tax: Why a penalty arises: When does a penalty arise

Please note: penalties under Schedule 7 Finance Act 1994 for failure to notify liability to register have been replaced by the Failure to Notify penalty introduced by Schedule 41 Finance Act 2008. The Failure to Notify penalty applies where an obligation to notify liability to register for IPT occurs on or after 01/04/2010. Penalties under Schedule 7 Finance Act 1994 will continue to apply where an obligation to notify occurs before 01/04/2010.

Please see the Compliance Handbook CH70000 for more information about the Failure to Notify penalty.

Please note: penalties under the Finance Act 1994 for failure to provide information and failure to produce records have now been replaced by penalties under Schedule 36 Finance Act 2008 where HMRC have requested information or documents on or after 01 /04/2010. If HMRC requested information or documents before 01/04/2010 the Finance Act 1994 penalties will continue to apply.

Please the Compliance Handbook CH20000 for more information about information and inspection powers.

All types of insurance risk located in the United Kingdom are taxable unless they are specifically exempted. Insurance Premium Tax (IPT) applies to buildings and contents insurance, motor insurance, travel and holiday insurance, accident and sickness insurance and all other non-exempt risks.

Penalties will be liable on IPT for the following reasons

  • late notification/failure to notify liability to register for IPT
  • failure to render a return and pay the IPT tax due by the due date
  • failure to pay by the insured
  • failure to notify cessation of trading
  • failure to furnish information and produce records
  • breach of regulation
  • failure to nominate a tax representative
  • breach of walking possession
  • interest charges on IPT under-declarations.