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HMRC internal manual

VAT Civil Penalties

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HM Revenue & Customs
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Insurance Premium Tax: Calculation and notification of a penalty: Insurance Premium Tax daily rate penalty letter to an insured person

Please note: penalties under Schedule 7 Finance Act 1994 for failure to notify liability to register have been replaced by the Failure to Notify penalty introduced by Schedule 41 Finance Act 2008.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note: penalties under the Finance Act 1994 for failure to provide information and failure to produce records have now been replaced by penalties under Schedule 36 Finance Act 2008 where HMRC have requested information or documents on or after 01 /04/2010.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.

The following is a suggested format for a letter

Name ……………………………………….

Address ……………………………………. Period Ref …………………………………

………………………………………………..

……………………………………………….. Date …………………………………………

A copy of this letter is being sent to all insured parties that received a notice of liability

Dear

Section 16(2) of Schedule 7 to the Finance Act 1994 provides that failure to pay an assessment raised under Section 65 of the Act will attract a penalty of 5% of the tax due or, if it is greater, £250 and you were assessed for the amount of £………….. on …………………………………….

It was pointed out to you that Section 16(3) of Schedule 7 to the Finance Act 1994 provides for a daily penalty of £20 for each relevant day that the failure to pay the assessed amount continues and that continued failure to comply would render you liable to further penalty assessments.

Our records show that you have not paid the assessed amount and you are therefore assessed a further penalty of £……………………. which is calculated at £20 per day for (no) …………………. days.

TAKE NOTICE that this penalty is calculated up to (date) …………………….. and that continued failure to comply after this date may render you liable to further penalty assessments.

The amount of £…………… is now due and should be paid immediately to the Birmingham Tax Accounting Centre [insert address] enclosing a copy of this letter and using the enclosed reply paid envelope.

If you consider that this penalty should not have been imposed you may, by writing to HMRC at the above address within 45 days of the date of this notice, ask them to reconsider their decision. If you are still not satisfied you may, if you wish, appeal to an independent Tribunal.

Yours faithfully