A new late filing penalty regime was introduced by section 106 and Schedule 55 of 2009 Finance Act.
The filing deadlines remain unchanged.
The regime is being rolled out gradually as follows:
| Return |
New Sch 55 regime applies |
Old rules apply |
| Income tax and CGT |
2010/11 & later returns (filing from 31/1/2012) |
2009/10 (filing up to 31/1/2011) |
| Corporation tax |
TBA |
FY 2010 |
| PAYE |
October 2011 |
2010/11 |
| CIS |
October 2011 |
subject to transitional measures |
| Stamp Duties, IHT & PRT*** |
TBA |
2010/11 |
***PRT = petroleum revenue tax
Penalties under the Sch 55 penalty regime:
Penalties are charged at the same rate for all the taxes except for:
- CIS - see below
- Offshore income - see below
|
Lateness |
Penalty |
|
Miss filing deadline |
£100 |
|
3 months late |
Daily penalty £10 per day for up to 90 days (max £900) |
|
6 months late |
5% of tax due or £300, if greater |
|
12 months late |
5% or £300 if greater, unless the taxpayer is held to be deliberately withholding information that would enable HMRC to assess the tax due. |
|
12 months & taxpayer deliberately withholds information |
Based on behaviour:
Reductions apply for prompted and unprompted disclosures and telling, giving and helping. |
See Penalties: SA late filing and payment for worked examples.
Penalties for late CIS returns
- See also Penalties: Construction Industry Scheme for a detailed break down of old and new and transitional measures
|
Lateness |
Penalty |
|
Miss filing deadline |
£100 |
|
2 months |
£200 |
|
6 months |
5% of tax due or £300, if greater |
|
12 months |
5% or £300 will apply, unless the taxpayer is held to be deliberately withholding information that would enable HMRC to assess the tax due. Reductions apply for prompted and unprompted disclosures and telling, giving and helping |
|
12 months & taxpayer deliberately withholds information |
Based on behaviour:
|
|
12 months: gross paid recipients |
Based on behaviour:
|
CIS: failure to register
When the first CIS return is filed the total penalty for all defaults is a maximum of £3,000 and the tax geared penalties cannot apply.
CIS: late filing transitional measures
HMRC announced that transitional measures may apply to certain new contractors who were charged penalties in 2009/10 and 2010/11.
Offshore income and gains
Measures introduced in the 2010 Finance Act have modified Sch 55 introducing toughter penalties for category 2 and 3 offences (relating to offshore income and gains). The effect is that penalties for inaccuracy increase to 45% for a careless but not concealed error to a maximum of 200%.
Determination of penalty when return is made
HMRC may determine the amount of tax due in order to raise a tax geared penalty. The amount will be re-assessed when the taxpayer makes the return.
Appeal and excuse
No penalty applies where the taxpayer satisfies HMRC or the tribunal on appeal that he has reasonable excuse for the failure.
- Insufficiency of funds or relying on another to do something is not a reasonable excuse.
- Following the end of the reasonable excuse circumstances the failure has to have been remedied without unreasonable delay.
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