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Finance (No. 2) Bill


Finance (No. 2) Bill
Schedule 48 — Penalties: late filing, late payment and errors

606

 

6          

After paragraph 6A insert—

“Amount of penalty: real time information for PAYE

6B         

Paragraphs 6C and 6D apply in the case of a return falling within

item 4 in the Table.

6C    (1)  

If P fails during a tax month to make a return on or before the filing

5

date, P is liable to a penalty under this paragraph in respect of that

month.

      (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

10

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

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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

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(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

25

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

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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.

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      (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—

40

(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—

 
 

Finance (No. 2) Bill
Schedule 48 — Penalties: late filing, late payment and errors

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(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.

5

      (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)—

10

(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.

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      (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

20

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

25

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-

30

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

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(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

40

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.”

7          

In paragraph 18 (assessment), for sub-paragraph (5) substitute—

45

    “(5)  

Sub-paragraph (6) applies if—

 
 

Finance (No. 2) Bill
Schedule 48 — Penalties: late filing, late payment and errors

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(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.

5

      (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.”

8     (1)  

Paragraph 19 (assessment) is amended as follows.

10

      (2)  

In sub-paragraph (2) after “Date A is” insert “—

(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,

15

(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,”.

20

      (3)  

In sub-paragraph (3)(a), after “return” insert “or returns (as the case may be

in relation to penalties under section 6C or 6D)”.

9     (1)  

Paragraph 27 (interpretation) is amended as follows.

      (2)  

After sub-paragraph (2) insert—

   “(2A)  

“The Commissioners” means the Commissioners for Her

25

Majesty’s Revenue and Customs.”

      (3)  

After sub-paragraph (3) insert—

   “(3A)  

“Tax month” means the period beginning with the 6th day of a

month and ending with the 5th day of the following month.”

Amendments to Schedule 56 to FA 2009: penalty for failure to make payments on time

30

10         

Schedule 56 (penalty for failure to make payments on time) to FA 2009 is

amended in accordance with paragraphs 11 to 14.

11         

In paragraph 1 (penalty for failure to pay tax), in sub-paragraph (4), for the

words from “the date on which” to the end substitute “the day after the date

specified in or for the purposes of column 4 of the Table in relation to that

35

amount.”

12    (1)  

Paragraph 6 (amount of penalty: PAYE and CIS amounts) is amended as

follows.

      (2)  

For sub-paragraph (1) substitute—

    “(1)  

P is liable to a penalty under this paragraph, in relation to each tax,

40

each time that P makes a default in relation to a tax year.”

      (3)  

In sub-paragraph (2)—

 
 

Finance (No. 2) Bill
Schedule 48 — Penalties: late filing, late payment and errors

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(a)   

in the opening words, after “default” insert “in relation to a tax year”;

(b)   

in paragraph (a), at the end insert “of tax payable in relation to the tax

year”;

(c)   

in paragraph (b), at the end insert “payable in relation to the tax

year”;

5

(d)   

in paragraph (c), at the end insert “payable in relation to the tax

year”;

(e)   

in paragraph (d), at the end insert “and due for the tax year”.

      (4)  

For sub-paragraphs (3) to (7) substitute—

    “(3)  

But where a failure to make one of those payments (or to pay an

10

amount comprising two or more of those payments) would, apart

from this sub-paragraph, constitute the first default in relation to

a tax year, that failure does not count as a default in relation to that

year for the purposes of a penalty under this paragraph.

      (4)  

The amount of the penalty for a default made in relation to a tax

15

year is determined by reference to—

(a)   

the amount of the tax comprised in the default, and

(b)   

the number of previous defaults that P has made in

relation to the same tax year.

      (5)  

If the default is P’s 1st, 2nd or 3rd default in relation to the tax year,

20

P is liable, at the time of the default, to a penalty of 1% of the

amount of tax comprised in the default.

      (6)  

If the default is P’s 4th, 5th or 6th default in relation to the tax year,

P is liable, at the time of the default, to a penalty of 2% of the

amount of tax comprised in the default.

25

      (7)  

If the default is P’s 7th, 8th or 9th default in relation to the tax year,

P is liable, at the time of the default, to a penalty of 3% of the

amount of tax comprised in the default.

     (7A)  

If the default is P’s 10th or subsequent default in relation to the tax

year, P is liable, at the time of the default, to a penalty of 4% of the

30

amount of tax comprised in the default.”

      (5)  

In sub-paragraph (8), for paragraph (b) substitute—

“(b)   

a previous default counts for the purposes of sub-

paragraphs (5) to (7A) even if it is remedied before the time

of the default giving rise to the penalty.”

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      (6)  

After sub-paragraph (8) insert—

   “(8A)  

Regulations made by the Commissioners for Her Majesty’s

Revenue and Customs may specify—

(a)   

circumstances in which, for the purposes of sub-paragraph

(2), a payment of less than the full amount may be treated

40

as a payment in full;

(b)   

circumstances in which sub-paragraph (3) is not to apply.

     (8B)  

Regulations under sub-paragraph (8A) may—

(a)   

make different provision for different cases, and

(b)   

include incidental, consequential and supplementary

45

provision.”

 
 

Finance (No. 2) Bill
Schedule 48 — Penalties: late filing, late payment and errors

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13         

After paragraph 9 insert—

“Interaction with other penalties and late payment surcharges

9A         

In the application of the following provisions, no account shall be

taken of a penalty under this Schedule—

(a)   

section 97A of TMA 1970 (multiple penalties),

5

(b)   

paragraph 12(2) of Schedule 24 to FA 2007 (interaction

with other penalties), and

(c)   

paragraph 15(1) of Schedule 41 to FA 2008 (interaction

with other penalties).”

14    (1)  

Paragraph 11 (assessment of penalty) is amended as follows.

10

      (2)  

For sub-paragraph (4A) substitute—

   “(4A)  

If an assessment in respect of a penalty is based on an amount of

tax due or payable that is found by HMRC to be excessive, HMRC

may by notice to P amend the assessment so that it is based upon

the correct amount.

15

     (4B)  

An amendment made under sub-paragraph (4A)—

(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 12.”

      (3)  

Omit sub-paragraph (5).

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Consequential amendment

15         

In consequence of paragraph 7, paragraph 10 of Schedule 10 to the Finance

(No. 3) Act 2010 is repealed.

Commencement

16    (1)  

The amendments made by paragraph 1 have effect in relation to any

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assessment of a penalty under Schedule 24 to FA 2007 made on or after the

day on which this Act is passed.

      (2)  

The amendments made by paragraphs 2 to 9 and 15 have effect for the tax

year 2014-15 and subsequent tax years in relation to failures to make returns

with a filing date (as defined in paragraph 1(4) of Schedule 55 to FA 2009) on

30

or after 6 April 2014.

      (3)  

The amendments made by paragraphs 10 to 14 have effect for defaults made

in relation to the tax year 2014-15 and subsequent tax years (see paragraph

6(2) of Sch.56 to FA 2009 (as amended by paragraph 12(3) of this Schedule)

as to when a default is made in relation to a tax year).

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Revised 28 March 2013