Finance Act 2009

Section 106

SCHEDULE 55U.K.Penalty for failure to make returns etc

Penalty for failure to make returns etcU.K.

1(1)A penalty is payable by a person (“P”) where P fails to make or deliver a return, or to deliver any other document, specified in the Table below on or before the filing date.U.K.

(2)Paragraphs 2 to [F113][F113J] set out—

(a)the circumstances in which a penalty is payable, and

(b)subject to paragraphs 14 to 17, the amount of the penalty.

(3)If P's failure falls within more than one paragraph of this Schedule, P is liable to a penalty under each of those paragraphs (but this is subject to paragraph 17(3)).

(4)In this Schedule—

• “filing date”, in relation to a return or other document, means the date by which it is required to be made or delivered to HMRC F2...;

• “penalty date”, in relation to a return or other document [F3falling within any of items [F41 to 3] [F42A] and 5 to [F513B] in the Table], means the date on which a penalty is first payable for failing to make or deliver it (that is to say, the day after the filing date).

[F6(4A)The Treasury may by order make such amendments to item 4 in the Table as they think fit in consequence of any amendment, revocation or re-enactment of the regulations mentioned in that item.]

(5)In the provisions of this Schedule which follow the Table—

(a)any reference to a return includes a reference to any other document specified in the Table, and

(b)any reference to making a return includes a reference to delivering a return or to delivering any such document.

[F19Amount of penalty: occasional returns and annual returns][F19Amount of penalty: occasional returns and returns for periods of 6 months or more]U.K.

[F192U.K.Paragraphs 3 to 6 apply in the case of a return falling within any of items [F201 to 3, 5] and 7 to 13 in the Table.]

[F19(1)Paragraphs 3 to 6 apply in the case of—

(a)a return falling within any of items [F211 to 5] [F212A, 4, 4A, 5], 7 and 8 to 13 in the Table,

(b)a return falling within any of items 7A, 7B and 14 to [F2228] [F2229] which relates to a period of 6 months or more, and

(c)a return falling within item 7A which relates to a transitional period for the purposes of the annual accounting scheme.

(2)In sub-paragraph (1)(c), a transitional period for the purposes of the annual accounting scheme is a prescribed accounting period (within the meaning of section 25(1) of VATA 1994) which—

(a)ends on the day immediately preceding the date indicated by the Commissioners for Her Majesty's Revenue and Customs in a notification of authorisation under regulation 50 of the Value Added Tax Regulations 1995 (S.I. 1995/2518) (admission to annual accounting scheme), or

(b)begins on the day immediately following the end of the last period of 12 months for which such an authorisation has effect.]

3U.K.P is liable to a penalty under this paragraph of £100.

4(1)P is liable to a penalty under this paragraph if (and only if)—U.K.

(a)P's failure continues after the end of the period of 3 months beginning with the penalty date,

(b)HMRC decide that such a penalty should be payable, and

(c)HMRC give notice to P specifying the date from which the penalty is payable.

(2)The penalty under this paragraph is £10 for each day that the failure continues during the period of 90 days beginning with the date specified in the notice given under sub-paragraph (1)(c).

(3)The date specified in the notice under sub-paragraph (1)(c)—

(a)may be earlier than the date on which the notice is given, but

(b)may not be earlier than the end of the period mentioned in sub-paragraph (1)(a).

5(1)P is liable to a penalty under this paragraph if (and only if) P's failure continues after the end of the period of 6 months beginning with the penalty date.U.K.

(2)The penalty under this paragraph is the greater of—

(a)5% of any liability to tax which would have been shown in the return in question, and

(b)£300.

6(1)P is liable to a penalty under this paragraph if (and only if) P's failure continues after the end of the period of 12 months beginning with the penalty date.U.K.

(2)Where, by failing to make the return, P [F23deliberately] withholds information which would enable or assist HMRC to assess P's liability to tax, the penalty under this paragraph is determined in accordance with sub-paragraphs (3) and (4).

(3)If the withholding of the information is deliberate and concealed, the penalty is the greater of—

(a)100% of any liability to tax which would have been shown in the return in question, and

(b)£300.

[F24(3A)For the purposes of sub-paragraph (3)(a), the relevant percentage is—

(a)for the withholding of category 1 information, [F25the relevant percentage],

(b)for the withholding of category 2 information, 150%, and

(c)for the withholding of category 3 information, 200%.]

(4)If the withholding of the information is deliberate but not concealed, the penalty is the greater of—

(a)[F26the relevant percentage] of any liability to tax which would have been shown in the return in question, and

(b)£300.

[F27(4A)For the purposes of sub-paragraph (4)(a), the relevant percentage is—

(a)for the withholding of category 1 information, 70%,

(b)for the withholding of category 2 information, 105%, and

(c)for the withholding of category 3 information, 140%.]

(5)In [F28any other case][F28any case not falling within sub-paragraph (2)], the penalty under this paragraph is the greater of—

(a)5% of any liability to tax which would have been shown in the return in question, and

(b)£300.

[F29(6)Paragraph 6A explains the 3 categories of information.]

[F306A[F31(A1)Information is category 0 information if—U.K.

(a)it involves a domestic matter,

(b)it involves an offshore matter or an offshore transfer, the territory in question is a category 0 territory and it is information which would enable or assist HMRC to assess P's liability to income tax, capital gains tax or inheritance tax, or

(c)it involves an offshore matter and it is information which would enable or assist HMRC to assess P's liability to a tax other than income tax, capital gains tax or inheritance tax.

(1)Information is category 1 information if—

(a)it involves an offshore matter or an offshore transfer,

(b)the territory in question is a category 1 territory, and

(c)it is information which would enable or assist HMRC to assess P's liability to income tax, capital gains tax or inheritance tax.]

(2)Information is category 2 information if—

(a)it involves an offshore matter [F32or an offshore transfer],

(b)the territory in question is a category 2 territory, and

(c)it is information which would enable or assist HMRC to assess P's liability to income tax[F33, capital gains tax or inheritance tax].

(3)Information is category 3 information if—

(a)it involves an offshore matter [F34or an offshore transfer],

(b)the territory in question is a category 3 territory, and

(c)it is information which would enable or assist HMRC to assess P's liability to income tax[F35, capital gains tax or inheritance tax].

(4)Information “involves an offshore matter” if the liability to tax which would have been shown in the return includes a liability to tax charged on or by reference to—

(a)income arising from a source in a territory outside the UK,

(b)assets situated or held in a territory outside the UK,

(c)activities carried on wholly or mainly in a territory outside the UK, or

(d)anything having effect as if it were income, assets or activities of a kind described above.

[F36(4A)If the liability to tax which would have been shown in the return is a liability to inheritance tax, assets are treated for the purposes of sub-paragraph (4) as situated or held in a territory outside the UK if they are so situated or held immediately after the transfer of value by reason of which inheritance tax becomes chargeable.

(4B)Information “involves an offshore transfer” if—

(a)it does not involve an offshore matter,

(b)it is information which would enable or assist HMRC to assess P's liability to income tax, capital gains tax or inheritance tax,

(c)by failing to make the return, P deliberately withholds the information (whether or not the withholding of the information is also concealed), and

(d)the applicable condition in paragraph 6AA is satisfied.]

(5)Information “involves a domestic matter” if [F37it does not involve an offshore matter or an offshore transfer].

(6)If the information which P withholds falls into more than one category—

(a)P's failure to make the return is to be treated for the purposes of this Schedule as if it were separate failures, one for each category of information according to the matters [F38or transfers] which the information involves, and

(b)for each separate failure, the liability to tax which would have been shown in the return in question is taken to be such share of the liability to tax which would have been shown in the return mentioned in paragraph (a) as is just and reasonable.

(7)For the purposes of this Schedule—

(a)paragraph 21A of Schedule 24 to FA 2007 (classification of territories) has effect, but

(b)an order under that paragraph does not apply to a failure if the filing date is before the date on which the order comes into force.

F39(8). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9)In this paragraph [F40and paragraph 6AA]—

• “assets” has the meaning given in section 21(1) of TCGA 1992, but also includes sterling;

• “UK” means the United Kingdom, including the territorial sea of the United Kingdom.]

[F416AA(1)This paragraph makes provision in relation to offshore transfers.U.K.

(2)Where the liability to tax which would have been shown in the return is a liability to income tax, the applicable condition is satisfied if the income on or by reference to which the tax is charged, or any part of the income—

(a)is received in a territory outside the UK, or

(b)is transferred before the relevant date to a territory outside the UK.

(3)Where the liability to tax which would have been shown in the return is a liability to capital gains tax, the applicable condition is satisfied if the proceeds of the disposal on or by reference to which the tax is charged, or any part of the proceeds—

(a)are received in a territory outside the UK, or

(b)are transferred before the relevant date to a territory outside the UK.

(4)Where the liability to tax which would have been shown in the return is a liability to inheritance tax, the applicable condition is satisfied if—

(a)the disposition that gives rise to the transfer of value by reason of which the tax becomes chargeable involves a transfer of assets, and

(b)after that disposition but before the relevant date the assets, or any part of the assets, are transferred to a territory outside the UK.

(5)In the case of a transfer falling within sub-paragraph (2)(b), (3)(b) or (4)(b), references to the income, proceeds or assets transferred are to be read as including references to any assets derived from or representing the income, proceeds or assets.

(6)In relation to an offshore transfer, the territory in question for the purposes of paragraph 6A is the highest category of territory by virtue of which the information involves an offshore transfer.

(7)“Relevant date” means the date on which P becomes liable to a penalty under paragraph 6.

6ABU.K.Regulations under paragraph 21B of Schedule 24 to FA 2007 (location of assets etc) apply for the purposes of paragraphs 6A and 6AA of this Schedule as they apply for the purposes of paragraphs 4A and 4AA of that Schedule.]

[F42Amount of penalty: real time information for PAYE [F43and apprenticeship levy] U.K.

6BU.K.Paragraphs 6C and 6D apply in the case of a return falling within item 4 [F44or 4A] in the Table.

6C(1)If P fails during a tax month to make a return on or before the filing date, P is liable to a penalty under this paragraph in respect of that month.U.K.

(2)But this is subject to sub-paragraphs (3) and (4).

(3)P is not liable to a penalty under this paragraph in respect of a tax month as a result of any failure to make a return on or before the filing date which occurs during the initial period.

(4)P is not liable to a penalty under this paragraph in respect of a tax month falling in a tax year if the month is the first tax month in that tax year during which P fails to make a return on or before the filing date (disregarding for this purpose any failure which occurs during the initial period).

(5)In sub-paragraphs (3) and (4) “the initial period” means the period which—

(a)begins with the day in the first tax year on which P is first required to make a return, and

(b)is of such duration as is specified in regulations made by the Commissioners,

and for this purpose “the first tax year” means the first tax year in which P is required to make returns.

(6)P may be liable under this paragraph to no more than one penalty in respect of each tax month.

(7)The penalty under this paragraph is to be calculated in accordance with regulations made by the Commissioners.

(8)Regulations under sub-paragraph (7) may provide for a penalty under this paragraph in respect of a tax month to be calculated by reference to either or both of the following matters—

(a)the number of persons employed by P, or treated as employed by P for the purposes of PAYE regulations;

(b)the number of previous penalties incurred by P under this paragraph in the same tax year.

(9)The Commissioners may by regulations disapply sub-paragraph (3) or (4) in such circumstances as are specified in the regulations.

(10)If P has elected under PAYE regulations to be treated as different employers in relation to different groups of employees, this paragraph applies to P as if—

(a)in respect of each group P were a different person, and

(b)each group constituted all of P's employees.

(11)Regulations made by the Commissioners under this paragraph may—

(a)make different provision for different cases, and

(b)include incidental, consequential and supplementary provision.

6D(1)P may be liable to one or more penalties under this paragraph in respect of extended failures.U.K.

(2)In this paragraph an “extended failure” means a failure to make a return on or before the filing date which continues after the end of the period of 3 months beginning with the day after the filing date.

(3)P is liable to a penalty or penalties under this paragraph if (and only if)—

(a)HMRC decide at any time that such a penalty or penalties should be payable in accordance with sub-paragraph (4) or (6), and

(b)HMRC give notice to P specifying the date from which the penalty, or each penalty, is payable.

(4)HMRC may decide under sub-paragraph (3)(a) that a separate penalty should be payable in respect of each unpenalised extended failure in the tax year to date.

(5)In that case the amount of the penalty in respect of each failure is 5% of any liability to make payments which would have been shown in the return in question.

(6)HMRC may decide under sub-paragraph (3)(a) that a single penalty should be payable in respect of all the unpenalised extended failures in the tax year to date.

(7)In that case the amount of the penalty in respect of those failures is 5% of the sum of the liabilities to make payments which would have been shown in each of the returns in question.

(8)For the purposes of this paragraph, an extended failure is unpenalised if a penalty has not already been imposed in respect of it under this paragraph (whether in accordance with sub-paragraph (4) or (6)).

(9)The date specified in the notice under sub-paragraph (3)(b) in relation to a penalty—

(a)may be earlier than the date on which the notice is given, but

(b)may not be earlier than the end of the period mentioned in sub-paragraph (2) in relation to the relevant extended failure.

(10)In sub-paragraph (9)(b) “the relevant extended failure” means—

(a)the extended failure in respect of which the penalty is payable, or

(b)if the penalty is payable in respect of more than one extended failure (in accordance with sub-paragraph (6)), the extended failure with the latest filing date.]

Amount of penalty: CIS returnsU.K.

7U.K.Paragraphs 8 to 13 apply in the case of a return falling within item 6 in the Table.

8U.K.P is liable to a penalty under this paragraph of £100.

9(1)P is liable to a penalty under this paragraph if (and only if) P's failure continues after the end of the period of 2 months beginning with the penalty date.U.K.

(2)The penalty under this paragraph is £200.

10(1)P is liable to a penalty under this paragraph if (and only if) P's failure continues after the end of the period of 6 months beginning with the penalty date.U.K.

(2)The penalty under this paragraph is the greater of—

(a)5% of any liability to make payments which would have been shown in the return in question, and

(b)£300.

11(1)P is liable to a penalty under this paragraph if (and only if) P's failure continues after the end of the period of 12 months beginning with the penalty date.U.K.

(2)Where, by failing to make the return, P [F45deliberately] withholds information which would enable or assist HMRC to assess the amount that P is liable to pay to HMRC in accordance with Chapter 3 of Part 3 of FA 2004, the penalty under this paragraph is determined in accordance with sub-paragraphs (3) and (4).

(3)If the withholding of the information is deliberate and concealed, the penalty is the greater of—

(a)100% of any liability to make payments which would have been shown in the return in question, and

(b)£3,000.

(4)If the withholding of the information is deliberate but not concealed, the penalty is the greater of—

(a)70% of any liability to make payments which would have been shown in the return in question, and

(b)£1,500.

(5)In [F46any other case][F46any case not falling within sub-paragraph (2)], the penalty under this paragraph is the greater of—

(a)5% of any liability to make payments which would have been shown in the return in question, and

(b)£300.

12(1)P is liable to a penalty under this paragraph if (and only if)—U.K.

(a)P's failure continues after the end of the period of 12 months beginning with the penalty date, and

(b)the information required in the return relates only to persons registered for gross payment (within the meaning of Chapter 3 of Part 3 of FA 2004).

(2)Where, by failing to make the return, P [F47deliberately] withholds information which relates to such persons, the penalty under this paragraph is—

(a)if the withholding of the information is deliberate and concealed, £3,000, and

(b)if the withholding of the information is deliberate but not concealed, £1,500.

13(1)This paragraph applies—U.K.

(a)at any time before P first makes a return falling within item 6 in the Table, to any return falling within that item, and

(b)at any time after P first makes a return falling within that item, to that return and any earlier return.

(2)In respect of any return or returns to which this paragraph applies—

(a)paragraphs 10(2)(b) and 11(5)(b) do not apply, and

(b)P is not liable to penalties under paragraphs 8 and 9 which exceed, in total, £3,000.

(3)In sub-paragraph (1)(b) “earlier return” means any return falling within item 6 which has a filing date earlier than the date on which P first made a return.

[F48Amount of penalty: returns for periods of between 2 and 6 monthsU.K.

13A(1)Paragraphs 13B to 13E apply in the case of a return falling within any of items [F497A, 7B], 13A, 13B and 14 to [F5028] [F5029] in the Table which relates to a period of less than 6 months but more than 2 months.U.K.

(2)But those paragraphs do not apply in the case of a return mentioned in paragraph 2(1)(c).

13B(1)P is liable to a penalty under this paragraph of £100.U.K.

(2)In addition, a penalty period begins to run on the penalty date for the return.

(3)The penalty period ends with the day 12 months after the filing date for the return, unless it is extended under paragraph 13C(2)(c) or 13H(2)(c).

13C(1)This paragraph applies if—U.K.

(a)a penalty period has begun under paragraph 13B or 13G because P has failed to make a return (“return A”), and

(b)before the end of the period, P fails to make another return (“return B”) falling within the same item in the Table as return A.

(2)In such a case—

(a)paragraph 13B(1) and (2) do not apply to the failure to make return B, but

(b)P is liable to a penalty under this paragraph for that failure, and

(c)the penalty period that has begun is extended so that it ends with the day 12 months after the filing date for return B.

(3)The amount of the penalty under this paragraph is determined by reference to the number of returns that P has failed to make during the penalty period.

(4)If the failure to make return B is P's first failure to make a return during the penalty period, P is liable, at the time of the failure, to a penalty of £200.

(5)If the failure to make return B is P's second failure to make a return during the penalty period, P is liable, at the time of the failure, to a penalty of £300.

(6)If the failure to make return B is P's third or a subsequent failure to make a return during the penalty period, P is liable, at the time of the failure, to a penalty of £400.

(7)For the purposes of this paragraph—

(a)in accordance with sub-paragraph (1)(b), the references in sub-paragraphs (3) to (6) to a return are references to a return falling within the same item in the Table as returns A and B, and

(b)a failure to make a return counts for the purposes of those sub-paragraphs if (but only if) the return relates to a period of less than 6 months.

(8)A penalty period may be extended more than once under sub-paragraph (2)(c).

13D(1)P is liable to a penalty under this paragraph if (and only if) P's failure continues after the end of the period of 6 months beginning with the penalty date.U.K.

(2)The penalty under this paragraph is the greater of—

(a)5% of any liability to tax which would have been shown in the return in question, and

(b)£300.

13E(1)P is liable to a penalty under this paragraph if (and only if) P's failure continues after the end of the period of 12 months beginning with the penalty date.U.K.

(2)Where, by failing to make the return, P deliberately withholds information which would enable or assist HMRC to assess P's liability to tax, the penalty under this paragraph is determined in accordance with sub-paragraphs (3) and (4).

(3)If the withholding of the information is deliberate and concealed, the penalty is the greater of—

(a)100% of any liability to tax which would have been shown in the return in question, and

(b)£300.

(4)If the withholding of the information is deliberate but not concealed, the penalty is the greater of—

(a)70% of any liability to tax which would have been shown in the return in question, and

(b)£300.

(5)In any case not falling within sub-paragraph (2), the penalty under this paragraph is the greater of—

(a)5% of any liability to tax which would have been shown in the return in question, and

(b)£300.

Amount of penalty: returns for periods of 2 months or lessU.K.

13F(1)Paragraphs 13G to 13J apply in the case of a return falling within any of items 7A, 7B and 14 to [F5128][F5129] in the Table which relates to a period of 2 months or less.U.K.

(2)But those paragraphs do not apply in the case of a return mentioned in paragraph 2(1)(c).

13G(1)P is liable to a penalty under this paragraph of £100.U.K.

(2)In addition, a penalty period begins to run on the penalty date for the return.

(3)The penalty period ends with the day 12 months after the filing date for the return, unless it is extended under paragraph 13C(2)(c) or 13H(2)(c).

13H(1)This paragraph applies if—U.K.

(a)a penalty period has begun under paragraph 13B or 13G because P has failed to make a return (“return A”), and

(b)before the end of the period, P fails to make another return (“return B”) falling within the same item in the Table as return A.

(2)In such a case—

(a)paragraph 13G(1) and (2) do not apply to the failure to make return B, but

(b)P is liable to a penalty under this paragraph for that failure, and

(c)the penalty period that has begun is extended so that it ends with the day 12 months after the filing date for return B.

(3)The amount of the penalty under this paragraph is determined by reference to the number of returns that P has failed to make during the penalty period.

(4)If the failure to make return B is P's first, second, third, fourth or fifth failure to make a return during the penalty period, P is liable, at the time of the failure, to a penalty of £100.

(5)If the failure to make return B is P's sixth or a subsequent failure to make a return during the penalty period, P is liable, at the time of the failure, to a penalty of £200.

(6)For the purposes of this paragraph—

(a)in accordance with sub-paragraph (1)(b), the references in sub-paragraphs (3) to (5) to a return are references to a return falling within the same item in the Table as returns A and B, and

(b)a failure to make a return counts for the purposes of those sub-paragraphs if (but only if) the return relates to a period of less than 6 months.

(7)A penalty period may be extended more than once under sub-paragraph (2)(c).

13I(1)P is liable to a penalty under this paragraph if (and only if) P's failure continues after the end of the period of 6 months beginning with the penalty date.U.K.

(2)The penalty under this paragraph is the greater of—

(a)5% of any liability to tax which would have been shown in the return in question, and

(b)£300.

13J(1)P is liable to a penalty under this paragraph if (and only if) P's failure continues after the end of the period of 12 months beginning with the penalty date.U.K.

(2)Where, by failing to make the return, P deliberately withholds information which would enable or assist HMRC to assess P's liability to tax, the penalty under this paragraph is determined in accordance with sub-paragraphs (3) and (4).

(3)If the withholding of the information is deliberate and concealed, the penalty is the greater of—

(a)100% of any liability to tax which would have been shown in the return in question, and

(b)£300.

(4)If the withholding of the information is deliberate but not concealed, the penalty is the greater of—

(a)70% of any liability to tax which would have been shown in the return in question, and

(b)£300.

(5)In any case not falling within sub-paragraph (2), the penalty under this paragraph is the greater of—

(a)5% of any liability to tax which would have been shown in the return in question, and

(b)£300.]

Reductions for disclosureU.K.

14[F52(A1)In this paragraph, “relevant information” means information which has been withheld by a failure to make a return.]U.K.

(1)Paragraph 15 provides for reductions in the penalty under paragraph 6(3) or (4) [F53where P discloses relevant information that involves a domestic matter] [F54or 11(3) or (4)][F54, 11(3) or (4), 13E(3) or (4) or 13J(3) or (4)] where P discloses [F55relevant information].

[F56(1A)Paragraph 15A provides for reductions in the penalty under paragraph 6(3) or (4) where P discloses relevant information that involves an offshore matter or an offshore transfer.

(1B)Sub-paragraph (2) applies where—

(a)P is liable to a penalty under paragraph 6(3) or (4) and P discloses relevant information that involves a domestic matter, or

(b)P is liable to a penalty under any of the other provisions mentioned in sub-paragraph (1) and P discloses relevant information.]

(2)P discloses relevant information by—

(a)telling HMRC about it,

(b)giving HMRC reasonable help in quantifying any tax unpaid by reason of its having been withheld, and

(c)allowing HMRC access to records for the purpose of checking how much tax is so unpaid.

[F57(2A)Sub-paragraph (2B) applies where P is liable to a penalty under paragraph 6(3) or (4) and P discloses relevant information that involves an offshore matter or an offshore transfer.

(2B)P discloses relevant information by—

(a)telling HMRC about it,

(b)giving HMRC reasonable help in quantifying any tax unpaid by reason of its having been withheld,

(c)allowing HMRC access to records for the purpose of checking how much tax is so unpaid, and

(d)providing HMRC with additional information.

(2C)The Treasury must make regulations setting out what is meant by “additional information” for the purposes of sub-paragraph (2B)(d).

(2D)Regulations under sub-paragraph (2C) are to be made by statutory instrument.

(2E)An instrument containing regulations under sub-paragraph (2C) is subject to annulment in pursuance of a resolution of the House of Commons.]

(3)Disclosure of relevant information—

(a)is “unprompted” if made at a time when P has no reason to believe that HMRC have discovered or are about to discover the relevant information, and

(b)otherwise, is “prompted”.

(4)In relation to disclosure “quality” includes timing, nature and extent.

[F58(5)Paragraph 6A(4) to (5) applies to determine whether relevant information involves an offshore matter, an offshore transfer or a domestic matter for the purposes of this paragraph.]

15(1)[F59Where a person who would otherwise be liable to a 100% penalty has made an unprompted disclosure, HMRC must reduce the 100% to a percentage, not below 30%, which reflects the quality of the disclosure.]U.K.

[F59If a person who would otherwise be liable to a penalty of a percentage shown in column 1 of the Table (a “standard percentage”) has made a disclosure, HMRC must reduce the standard percentage to one that reflects the quality of the disclosure.]

(2)[F59Where a person who would otherwise be liable to a 100% penalty has made a prompted disclosure, HMRC must reduce the 100% to a percentage, not below 50%, which reflects the quality of the disclosure.]

[F59But the standard percentage may not be reduced to a percentage that is below the minimum shown for it—

(a)in the case of a prompted disclosure, in column 2 of the Table, and

(b)in the case of an unprompted disclosure, in column 3 of the Table.]

(3)[F61Where a person who would otherwise be liable to a 70% penalty has made an unprompted disclosure, HMRC must reduce the 70% to a percentage, not below 20%, which reflects the quality of the disclosure.]

(4)[F62Where a person who would otherwise be liable to a 70% penalty has made a prompted disclosure, HMRC must reduce the 70% to a percentage, not below 35%, which reflects the quality of the disclosure.]

(5)But HMRC must not under this paragraph—

(a)reduce a penalty under paragraph 6(3) or (4) below £300, or

(b)reduce a penalty under [F63paragraph 11(3) or (4)][F63sub-paragraph (3) or (4) of any of paragraphs 11, 13E and 13J] below the amount set by [F64paragraph 11(3)(b) or (4)(b) (as the case may be)][F64paragraph (b) of that sub-paragraph].

[F6515A(1)If a person who would otherwise be liable to a penalty of a percentage shown in column 1 of the Table (a “standard percentage”) has made a disclosure, HMRC must reduce the standard percentage to one that reflects the quality of the disclosure.U.K.

(2)But the standard percentage may not be reduced to a percentage that is below the minimum shown for it—

(a)in the case of a prompted disclosure, in column 2 of the Table, and

(b)in the case of an unprompted disclosure, in column 3 of the Table.

(3)But HMRC must not under this paragraph reduce a penalty below £300.]

Special reductionU.K.

16(1)If HMRC think it right because of special circumstances, they may reduce a penalty under any paragraph of this Schedule.U.K.

(2)In sub-paragraph (1) “special circumstances” does not include—

(a)ability to pay, or

(b)the fact that a potential loss of revenue from one taxpayer is balanced by a potential over-payment by another.

(3)In sub-paragraph (1) the reference to reducing a penalty includes a reference to—

(a)staying a penalty, and

(b)agreeing a compromise in relation to proceedings for a penalty.

Interaction with other penalties and late payment surchargesU.K.

17(1)Where P is liable for a penalty under any paragraph of this Schedule which is determined by reference to a liability to tax, the amount of that penalty is to be reduced by the amount of any other penalty incurred by P, if the amount of the penalty is determined by reference to the same liability to tax.U.K.

(2)In sub-paragraph (1) the reference to “any other penalty” does not include—

(a)a penalty under any other paragraph of this Schedule, or

(b)a penalty under Schedule 56 (penalty for late payment of tax)[F66, or

(c)a penalty under Part 4 of FA 2014 (penalty where corrective action not taken after follower notice etc)] [F67or

(d)a penalty under Schedule 22 to FA 2016 (asset-based penalty)].

(3)Where P is liable for a penalty under more than one paragraph of this Schedule which is determined by reference to a liability to tax, the aggregate of the amounts of those penalties must not exceed [F68100%] [F68the relevant percentage] of the liability to tax.

[F69(4)The relevant percentage is—

(a)if one of the penalties is a penalty under paragraph 6(3) or (4) and the information withheld is category 3 information, 200%,

(b)if one of the penalties is a penalty under paragraph 6(3) or (4) and the information withheld is category 2 information, 150%, and

(c)in all other cases, 100%.]

[F70[F71 Cancellation of penalty]U.K.

[F7117A(1)This paragraph applies where—U.K.

(a)P is liable for a penalty under any paragraph of this Schedule in relation to a failure to make a return falling within item 1 or 2 in the Table, and

(b)[F72HMRC decide to give P a notice under section 8B withdrawing] a notice under section 8 or 8A of that Act.

(2)The notice under section 8B of TMA 1970 may include provision under this paragraph cancelling liability to the penalty from the date specified in the notice.]

[F7117B(1)This paragraph applies where—U.K.

(a)P is liable for a penalty under any paragraph of this Schedule in relation to a failure to make a return falling within item 3 in the Table, and

(b)a request is made under section 12AAA of TMA 1970 for HMRC to withdraw a notice under section 12AA of that Act.

(2)The notice under section 12AAA of TMA 1970 may include provision under this paragraph cancelling liability to the penalty from the date specified in the notice.]]

AssessmentU.K.

18(1)Where P is liable for a penalty under any paragraph of this Schedule HMRC must—U.K.

(a)assess the penalty,

(b)notify P, and

(c)state in the notice the period in respect of which the penalty is assessed.

(2)A penalty under any paragraph of this Schedule must be paid before the end of the period of 30 days beginning with the day on which notification of the penalty is issued.

(3)An assessment of a penalty under any paragraph of this Schedule—

(a)is to be treated for procedural purposes in the same way as an assessment to tax (except in respect of a matter expressly provided for by this Schedule),

(b)may be enforced as if it were an assessment to tax, and

(c)may be combined with an assessment to tax.

(4)A supplementary assessment may be made in respect of a penalty if an earlier assessment operated by reference to an underestimate of the liability to tax which would have been shown in a return.

[F73(5)Sub-paragraph (6) applies if—

(a)an assessment in respect of a penalty is based on a liability to tax that would have been shown in a return, and

(b)that liability is found by HMRC to be excessive.

(6)HMRC may by notice to P amend the assessment so that it is based upon the correct amount.

(7)An amendment under sub-paragraph (6)—

(a)does not affect when the penalty must be paid;

(b)may be made after the last day on which the assessment in question could have been made under paragraph 19.]

19(1)An assessment of a penalty under any paragraph of this Schedule in respect of any amount must be made on or before the later of date A and (where it applies) date B.U.K.

(2)Date A is [F74—

(a)in the case of an assessment of a penalty under paragraph 6C, the last day of the period of 2 years beginning with the end of the tax month in respect of which the penalty is payable,

(b)in the case of an assessment of a penalty under paragraph 6D, the last day of the period of 2 years beginning with the filing date for the relevant extended failure (as defined in paragraph 6D(10)), and

(c)in any other case,]

the last day of the period of 2 years beginning with the filing date.

(3)Date B is the last day of the period of 12 months beginning with—

(a)the end of the appeal period for the assessment of the liability to tax which would have been shown in the return [F75 or returns (as the case may be in relation to penalties under section 6C or 6D)], or

(b)if there is no such assessment, the date on which that liability is ascertained or it is ascertained that the liability is nil.

(4)In sub-paragraph (3)(a) “appeal period” means the period during which—

(a)an appeal could be brought, or

(b)an appeal that has been brought has not been determined or withdrawn.

(5)Sub-paragraph (1) does not apply to a re-assessment under paragraph 24(2)(b).

AppealU.K.

20(1)P may appeal against a decision of HMRC that a penalty is payable by P.U.K.

(2)P may appeal against a decision of HMRC as to the amount of a penalty payable by P.

21(1)An appeal under paragraph 20 is to be treated in the same way as an appeal against an assessment to the tax concerned (including by the application of any provision about bringing the appeal by notice to HMRC, about HMRC review of the decision or about determination of the appeal by the First-tier Tribunal or Upper Tribunal).U.K.

(2)Sub-paragraph (1) does not apply—

(a)so as to require P to pay a penalty before an appeal against the assessment of the penalty is determined, or

(b)in respect of any other matter expressly provided for by this Act.

22(1)On an appeal under paragraph 20(1) that is notified to the tribunal, the tribunal may affirm or cancel HMRC's decision.U.K.

(2)On an appeal under paragraph 20(2) that is notified to the tribunal, the tribunal may—

(a)affirm HMRC's decision, or

(b)substitute for HMRC's decision another decision that HMRC had power to make.

(3)If the tribunal substitutes its decision for HMRC's, the tribunal may rely on paragraph 16—

(a)to the same extent as HMRC (which may mean applying the same percentage reduction as HMRC to a different starting point), or

(b)to a different extent, but only if the tribunal thinks that HMRC's decision in respect of the application of paragraph 16 was flawed.

(4)In sub-paragraph (3)(b) “flawed” means flawed when considered in the light of the principles applicable in proceedings for judicial review.

(5)In this paragraph “tribunal” means the First-tier Tribunal or Upper Tribunal (as appropriate by virtue of paragraph 21(1)).

Reasonable excuseU.K.

23(1)[F76Liability to a penalty under any paragraph of this Schedule does not arise in relation to a failure to make a return if P satisfies HMRC or (on appeal) the First-tier Tribunal or Upper Tribunal that there is a reasonable excuse for the failure.]U.K.

[F76If P satisfies HMRC or (on appeal) the First-tier Tribunal or Upper Tribunal that there is a reasonable excuse for a failure to make a return—

(a)liability to a penalty under any paragraph of this Schedule does not arise in relation to that failure, and

(b)the failure does not count for the purposes of paragraphs 13B(2), 13C, 13G(2) and 13H.]

(2)For the purposes of sub-paragraph (1)—

(a)an insufficiency of funds is not a reasonable excuse, unless attributable to events outside P's control,

(b)where P relies on any other person to do anything, that is not a reasonable excuse unless P took reasonable care to avoid the failure, and

(c)where P had a reasonable excuse for the failure but the excuse has ceased, P is to be treated as having continued to have the excuse if the failure is remedied without unreasonable delay after the excuse ceased.

Determination of penalty geared to tax liability where no return madeU.K.

24(1)References to a liability to tax which would have been shown in a return are references to the amount which, if a complete and accurate return had been delivered on the filing date, would have been shown to be due or payable by the taxpayer in respect of the tax concerned for the period to which the return relates.U.K.

(2)In the case of a penalty which is assessed at a time before P makes the return to which the penalty relates—

(a)HMRC is to determine the amount mentioned in sub-paragraph (1) to the best of HMRC's information and belief, and

(b)if P subsequently makes a return, the penalty must be re-assessed by reference to the amount of tax shown to be due and payable in that return (but subject to any amendments or corrections to the return).

(3)In calculating a liability to tax which would have been shown in a return, no account is to be taken of any relief under [F77section 458 of CTA 2010] (relief in respect of repayment etc of loan) which is deferred under [F78subsection (5)] of that section.

[F79Partnerships]U.K.

[F7925(1)This paragraph applies where—U.K.

(a)the representative partner, or

(b)a successor of the representative partner,

fails to make a return falling within item 3 in the Table (partnership returns).

(2)A penalty in respect of the failure is payable by every relevant partner.

(3)In accordance with sub-paragraph (2), any reference in this Schedule to P is to be read as including a reference to a relevant partner.

(4)An appeal under paragraph 20 in connection with a penalty payable by virtue of this paragraph may be brought only by—

(a)the representative partner, or

(b)a successor of the representative partner.

(5)Where such an appeal is brought in connection with a penalty payable in respect of a failure, the appeal is to treated as if it were an appeal in connection with every penalty payable in respect of that failure.

(6)In this paragraph—

• “relevant partner” means a person who was a partner in the partnership to which the return relates at any time during the period in respect of which the return was required;

• “representative partner” means a person who has been required by a notice served under or for the purposes of section 12AA(2) or (3) of TMA 1970 to deliver any return;

• “successor” has the meaning given by section 12AA(11) of TMA 1970.]

Double jeopardyU.K.

26U.K.P is not liable to a penalty under any paragraph of this Schedule in respect of a failure or action in respect of which P has been convicted of an offence.

InterpretationU.K.

27(1)This paragraph applies for the construction of this Schedule.U.K.

(2)The withholding of information by P is—

(a)“deliberate and concealed” if P deliberately withholds the information and makes arrangements to conceal the fact that the information has been withheld, and

(b)“deliberate but not concealed” if P deliberately withholds the information but does not make arrangements to conceal the fact that the information has been withheld.

[F80(2A)The Commissioners” means the Commissioners for Her Majesty's Revenue and Customs.]

(3)“HMRC” means Her Majesty's Revenue and Customs.

[F81(3A)Tax month” means the period beginning with the 6th day of a month and ending with the 5th day of the following month.]

(4)References to a liability to tax, in relation to a return falling within item 6 in the Table (construction industry scheme), are to a liability to make payments in accordance with Chapter 3 of Part 3 of FA 2004.

(5)References to an assessment to tax, in relation to inheritance tax and stamp duty reserve tax, are to a determination.