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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) 5If 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.

(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
10month 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
15filing 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
20required 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) 25P 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
30under 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
35paragraph 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
40paragraph 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—

Finance (No. 2) BillPage 601

(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
5respect of extended failures.

(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
10only 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
15penalty, 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
205% 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) 25In 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
30of 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,
35but

(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) 40the 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.

7 45In paragraph 18 (assessment), for sub-paragraph (5) substitute—

(5) Sub-paragraph (6) applies if—

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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
5upon 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.

8 (1) 10Paragraph 19 (assessment) is amended as follows.

(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
15payable,

(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) 20in any other case,.

(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) 25The Commissioners” means the Commissioners for Her
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.

30Amendments to Schedule 56 to FA 2009: penalty for failure to make payments on time

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
35specified in or for the purposes of column 4 of the Table in relation to that
amount.”

12 (1) Paragraph 6 (amount of penalty: PAYE and CIS amounts) is amended as
follows.

(2) For sub-paragraph (1) substitute—

(1) 40P is liable to a penalty under this paragraph, in relation to each tax,
each time that P makes a default in relation to a tax year.

(3) In sub-paragraph (2)—

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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
5year”;

(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) 10But where a failure to make one of those payments (or to pay an
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) 15The amount of the penalty for a default made in relation to a tax
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) 20If the default is P’s 1st, 2nd or 3rd default in relation to the tax year,
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
25amount of tax comprised in the default.

(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
30year, P is liable, at the time of the default, to a penalty of 4% of the
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
35of the default giving rise to the penalty.

(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
40(2), a payment of less than the full amount may be treated
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) 45include incidental, consequential and supplementary
provision.

Finance (No. 2) BillPage 604

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) 5section 97A of TMA 1970 (multiple penalties),

(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) 10Paragraph 11 (assessment of penalty) is amended as follows.

(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
15the correct amount.

(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) 20Omit sub-paragraph (5).

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) 25The amendments made by paragraph 1 have effect in relation to any
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
30with a filing date (as defined in paragraph 1(4) of Schedule 55 to FA 2009) on
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)
35as to when a default is made in relation to a tax year).

Finance (No. 2) BillPage 605

Section 230

SCHEDULE 49 Withdrawal of notice to file etc

TMA 1970

1 TMA 1970 is amended in accordance with paragraphs 2 to 5.

2 (1) 5Section 7 (notice of liability to income tax and capital gains tax) is amended
as follows.

(2) In subsection (1)—

(a) for paragraph (b) substitute—

(b) falls within subsection (1A) or (1B),, and

(b) 10for “six months from the end of that year” substitute “the notification
period”.

(3) After subsection (1) insert—

(1A) A person falls within this subsection if the person has not received a
notice under section 8 requiring a return for the year of assessment
15of the person’s total income and chargeable gains.

(1B) A person falls within this subsection if the person—

(a) has received a notice under section 8 requiring a return for
the year of assessment of the person’s total income and
chargeable gains, and

(b) 20has received a notice under section 8B withdrawing the
notice under section 8.

(1C) In subsection (1) “the notification period” means—

(a) in the case of a person who falls within subsection (1A), the
period of 6 months from the end of the year of assessment, or

(b) 25in the case of a person who falls within subsection (1B)—

(i) the period of 6 months from the end of the year of
assessment, or

(ii) the period of 30 days beginning with the day after the
day on which the notice under section 8 was
30withdrawn,

whichever ends later.

(4) In subsection (2), for the words from “shall have effect” to the end substitute
“and subsections (1A) to (1C) have effect as if references to a notice under
section 8 were references to a notice under section 8A.”

3 35After section 8A insert—

8B Withdrawal by HMRC of notice under section 8 or 8A

(1) This section applies to a person who is given a notice under section
8 or 8A.

(2) Before the end of the withdrawal period, the person may request
40HMRC to withdraw the notice.

(3) But no request may be made if—

Finance (No. 2) BillPage 606

(a) the person has made a return under section 8 or 8A in
pursuance of the notice under that section, or

(b) the person has been served with notice of a determination
under section 28C by virtue of the notice under section 8 or
58A having been given to the person.

(4) If, on receiving a request, HMRC decide to withdraw the notice
under section 8 or 8A they must do so by giving the person a notice
under this section.

(5) A notice under this section must specify the date on which the notice
10under section 8 or 8A is withdrawn.

(6) For the purposes of subsection (2) “the withdrawal period” means—

(a) the period of 2 years beginning with the end of the year of
assessment to which the notice under section 8 or 8A relates,
or

(b) 15in exceptional circumstances, such extended period as
HMRC may agree with the person.

(7) Withdrawal of a notice given to a person under section 8 or 8A in
relation to a year of assessment does not prevent HMRC from giving
the person a further notice under that section in relation to that year.

(8) 20See paragraph 17A of Schedule 55 to FA 2009 as to the cancellation of
liability to a penalty under any paragraph of that Schedule by
including provision in a notice under this section.

4 After section 12AA insert—

12AAA Withdrawal by HMRC of notice under section 12AA

(1) 25This section applies to a partner who is required by a notice under
section 12AA to deliver a return.

(2) Before the end of the withdrawal period, the partner may request
HMRC to withdraw the notice.

(3) But no request may be made if the partner has delivered a return
30under section 12AA in pursuance of the notice.

(4) If, on receiving a request, HMRC decide to withdraw the notice
under section 12AA they must do so by giving the partner a notice
under this section.

(5) A notice under this section must specify the date on which the notice
35under section 12AA is withdrawn.

(6) For the purposes of subsection (2) “the withdrawal period” means—

(a) in the case of a partnership which includes one or more
companies, the period of 2 years beginning with the end of
the period in respect of which the return under section 12AA
40was required by the notice under that section,

(b) in the case of any other partnership, the period of 2 years
beginning with the end of the year of assessment to which the
notice under section 12AA relates, or

Finance (No. 2) BillPage 607

(c) in the case of any partnership, such extended period as
HMRC may agree with the partner in exceptional
circumstances.

(7) Withdrawal of a notice under section 12AA in relation to the period
5in respect of which the return under that section was required or year
of assessment (as the case may be) does not prevent HMRC from
serving a further notice under section 12AA requiring a partner to
deliver a return in relation to that period or year.

(8) References in subsections (2) to (6) to the partner include references
10to a successor of the partner (see section 12AA(11)).

(9) See paragraph 17B of Schedule 55 to FA 2009 as to the cancellation of
liability to a penalty under any paragraph of that Schedule by
including provision in a notice under this section.

5 In section 59B (payment of income and capital gains tax), after subsection (4)
15insert—

(4ZA) In a case in which the notice required by section 7 was given
following the receipt of a notice under section 8B, subsections (3) and
(4) apply as if—

(a) the reference to the notice required by section 7 were a
20reference to the original notice required by that section, and

(b) the references to notice under section 8 or 8A were references
to the original notice under that section.

(4ZB) In subsection (4ZA) the references to original notices are to notices
given before the notice under section 8B.

25FA 2008

6 (1) Paragraph 7 of Schedule 41 to FA 2008 (potential lost revenue in respect of
failure to comply with relevant obligation) is amended as follows.

(2) After sub-paragraph (1) insert—

(1A) In the case of an obligation under section 7 of TMA 1970 which
30arises by virtue of subsection (1B) of that section, the potential lost
revenue is so much of any income tax or capital gains tax to which
P is liable in respect of the tax year in question as is, by reason of
the failure to comply with the obligation—

(a) where the period specified in subsection (1C)(b)(ii) of that
35section applies and ends after the relevant date, unpaid at
the end of that period, or

(b) in any other case, unpaid on the relevant date.

(1B) For the purposes of sub-paragraph (1A) the relevant date is—

(a) 31 January following the tax year, or

(b) 40if, after that date, HMRC refund a payment on account in
respect of the tax year to P, the day after the refund is
issued.

(3) In sub-paragraph (2), after “and a tax year” insert “(not falling within sub-
paragraph (1A))”.

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FA 2009

7 (1) Paragraph 3 of Schedule 53 to FA 2009 (late payment interest start date:
amendments and discovery assessments etc) is amended as follows.

(2) In sub-paragraph (3)—

(a) 5for “as required” substitute “in accordance with a requirement”, and

(b) after “tax)” insert “that arose by virtue of subsection (1A) of that
section”.

(3) After that sub-paragraph insert—

(3A) In the case of a person (“P”) who failed to give notice in accordance
10with a requirement under section 7 of TMA 1970 that arose by
virtue of subsection (1B) of that section, the reference in sub-
paragraph (1)(c) to an assessment which ought to have been made
by P is a reference to the assessment which P would have been
required to make if no notice relating to the year of assessment
15concerned had been withdrawn under section 8B of that Act.

8 In Schedule 55 to that Act (penalty for failure to make returns etc), after
paragraph 17 insert—

Cancellation of penalty

17A (1) This paragraph applies where—

(a) 20P 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) P makes a request under section 8B of TMA 1970 for
HMRC to withdraw a notice under section 8 or 8A of that
25Act.

(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.

17B (1) This paragraph applies where—

(a) 30P 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
35Act.

(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.

Commencement

9 (1) 40The amendments made by this Schedule have effect—

(a) in relation to a return under section 12AA of TMA 1970 for a
partnership which includes one or more companies, in respect of a
return for a relevant period beginning on or after 6 April 2012, and

Finance (No. 2) BillPage 609

(b) in relation to a return under that section for any other partnership, or
a return under section 8 or 8A of that Act, in respect of a return for a
year of assessment beginning on or after 6 April 2012.

(2) In sub-paragraph (1)(a), “relevant period” means a period in respect of
5which a return is required.

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Contents page 500-509 510-519 520-536 537-537 540-556 557-559 560-569 570-579 580-589 590-599 600-609 Last page