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Finance Bill
Schedule 55 — Penalty for failure to make returns etc

404

 

the taxpayer in respect of the tax concerned for the period to which the

return relates.

      (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)

5

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

10

account is to be taken of any relief under subsection (4) of section 419 of

ICTA (relief in respect of repayment etc of loan) which is deferred under

subsection (4A) of that section.

Partnerships

25    (1)  

This paragraph applies where—

15

(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

20

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.

25

      (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

30

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;

35

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

Double jeopardy

26         

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.

Interpretation

40

27    (1)  

This paragraph applies for the construction of this Schedule.

      (2)  

The withholding of information by P is—

 
 

Finance Bill
Schedule 56 — Penalty for failure to make payments on time

405

 

(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

5

the information has been withheld.

      (3)  

“HMRC” means Her Majesty’s Revenue and Customs.

      (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.

10

      (5)  

References to an assessment to tax, in relation to inheritance tax and stamp

duty reserve tax, are to a determination.

Schedule 56

Section 106

 

Penalty for failure to make payments on time

Penalty for failure to pay tax

15

1     (1)  

A penalty is payable by a person (“P”) where P fails to pay an amount of tax

specified in column 3 of the Table below on or before the date specified in

column 4.

      (2)  

Paragraphs 3 to 8 set out—

(a)   

the circumstances in which a penalty is payable, and

20

(b)   

subject to paragraph 9, the amount of the penalty.

      (3)  

If P’s failure falls within more than one provision of this Schedule, P is liable

to a penalty under each of those provisions.

      (4)  

In the following provisions of this Schedule, the “penalty date”, in relation

to an amount of tax, means the date on which a penalty is first payable for

25

failing to pay the amount (that is to say, the day after the date specified in or

for the purposes of column 4 of the Table).

  

Tax to which payment

Amount of tax payable

Date after which penalty is incurred

 
  

relates

   
 

PRINCIPAL AMOUNTS

 

30

 

1

Income tax or capital

Amount payable under section

The date falling 30 days after the date

 
  

gains tax

59B(3) or (4) of TMA 1970

specified in section 59B(3) or (4) of

 
    

TMA 1970 as the date by which the

 
    

amount must be paid

 
 

2

Income tax

Amount payable under PAYE

The date determined by or under

 

35

   

regulations (except an amount

PAYE regulations as the date by

 
   

falling within item 19)

which the amount must be paid

 
 

3

Income tax

Amount shown in return under

The date falling 30 days after the date

 
   

section 254(1) of FA 2004

specified in section 254(5) of FA 2004

 
    

as the date by which the amount must

 

40

    

be paid

 
 
 

Finance Bill
Schedule 56 — Penalty for failure to make payments on time

406

 
  

Tax to which payment

Amount of tax payable

Date after which penalty is incurred

 
  

relates

   
 

4

Deductions on

Amount payable under section

The date determined by or under

 
  

account of tax under

62 of FA 2004 (except an amount

regulations under section 62 of FA

 
  

Chapter 3 of Part 3 of

falling within item 16, 21 or 22)

2004 as the date by which the amount

 

5

  

FA 2004 (construction

 

must be paid

 
  

industry scheme)

   
 

5

Corporation tax

Amount shown in company tax

The filing date for the company tax

 
   

return under paragraph 3 of

return for the accounting period for

 
   

Schedule 18 to FA 1998

which the tax is due (see paragraph 14

 

10

    

of Schedule 18 to FA 1998)

 
 

6

Corporation tax

Amount payable under

The filing date for the company tax

 
   

regulations under section 59E of

return for the accounting period for

 
   

TMA 1970 (except an amount

which the tax is due (see paragraph 14

 
   

falling within item 16, 21 or 22)

of Schedule 18 to FA 1998)

 

15

 

7

Inheritance tax

Amount payable under section

The filing date (determined under

 
   

226 of IHTA 1984 (except an

section 216 of IHTA 1984) for the

 
   

amount falling within item 14 or

account in respect of the liability for

 
   

20)

that amount

 
 

8

Inheritance tax

Amount payable under section

For the first instalment, the filing date

 

20

   

227 or 229 of IHTA 1984 (except

(determined under section 216 of

 
   

an amount falling within item 14

IHTA 1984) for the account in respect

 
   

or 20)

of the liability for that amount

 
    

For any later instalment, the date

 
    

falling 30 days after the date

 

25

    

determined under section 227 or 229

 
    

of IHTA 1984 as the date by which the

 
    

instalment must be paid

 
 

9

Stamp duty land tax

Amount payable under section

The date falling 30 days after the date

 
   

86(1) or (2) of FA 2003

specified in section 86(1) or (2) of FA

 

30

    

2003 as the date by which the amount

 
    

must be paid

 
 

10

Stamp duty reserve

Amount payable under section

The date falling 30 days after the date

 
  

tax

87, 93 or 96 of FA 1986 or

determined by or under regulations

 
   

Schedule 19 to FA 1999 (except

under section 98 of FA 1986 as the

 

35

   

an amount falling within item 16,

date by which the amount must be

 
   

21 or 22)

paid

 
 

11

Petroleum revenue

Amount payable under

The date falling 30 days after the date

 
  

tax

paragraph 13 of Schedule 2 to

determined in accordance with

 
   

OTA 1975 (except an amount

paragraph 13 of Schedule 2 to OTA

 

40

   

falling within item 16, 21 or 22)

1975 as the date by which the amount

 
    

must be paid

 
 

AMOUNTS PAYABLE IN DEFAULT OF A RETURN BEING MADE

 
 

12

Income tax or capital

Amount payable under section

The date falling 30 days after the date

 
  

gains tax

59B(5A) of TMA 1970

specified in section 59B(5A) of TMA

 

45

    

1970 as the date by which the amount

 
    

must be paid

 
 

13

Corporation tax

Amount shown in determination

The filing date for the company tax

 
   

under paragraph 36 or 37 of

return for the accounting period for

 
   

Schedule 18 to FA 1998

which the tax is due (see paragraph 14

 

50

    

of Schedule 18 to FA 1998)

 
 

14

Inheritance tax

Amount shown in a

The filing date (determined under

 
   

determination made by HMRC in

section 216 of IHTA 1984) for the

 
   

the circumstances set out in

account in respect of the liability for

 
   

paragraph 2

that amount

 

55

 
 

Finance Bill
Schedule 56 — Penalty for failure to make payments on time

407

 
  

Tax to which payment

Amount of tax payable

Date after which penalty is incurred

 
  

relates

   
 

15

Stamp duty land tax

Amount shown in determination

The date falling 30 days after the filing

 
   

under paragraph 25 of Schedule

date for the return in question

 
   

10 to FA 2003 (including that

  

5

   

paragraph as applied by section

  
   

81(3) of that Act)

  
 

16

Tax falling within

Amount (not falling within any

The date falling 30 days after the date

 
  

any of items 1 to 6 or

of items 12 to 15) which is shown

by which the amount would have

 
  

9 to 11

in an assessment or

been required to be paid if it had been

 

10

   

determination made by HMRC in

shown in the return in question

 
   

the circumstances set out in

  
   

paragraph 2

  
 

AMOUNTS SHOWN TO BE DUE IN OTHER ASSESSMENTS, DETERMINATIONS, ETC

 
 

17

Income tax or capital

Amount payable under section

The date falling 30 days after the date

 

15

  

gains tax

55 of TMA 1970

determined in accordance with

 
    

section 55(3), (4), (6) or (9) of TMA

 
    

1970 as the date by which the amount

 
    

must be paid

 
 

18

Income tax or capital

Amount payable under section

The date falling 30 days after the date

 

20

  

gains tax

59B(5) or (6) of TMA 1970

specified in section 59B(5) or (6) of

 
    

TMA 1970 as the date by which the

 
    

amount must be paid

 
 

19

Income tax

Amount shown in determination

The date determined by or under

 
   

made by HMRC where it appears

PAYE regulations as the date by

 

25

   

that tax payable under PAYE

which the amount must be paid

 
   

regulations has not been paid

  
 

20

Inheritance tax

Amount shown in—

The later of—

 
   

(a)   

an amendment or

(a)   

the filing date (determined

 
   

correction of a return

under section 216 of IHTA

 

30

   

showing an amount

1984) for the account in

 
   

falling within item 7 or

respect of the liability for

 
   

8, or

that amount, and

 
   

(b)   

a determination made

(b)   

the date falling 30 days after

 
   

by HMRC in

the date on which the

 

35

   

circumstances other

amendment, correction,

 
   

than those set out in

assessment or determination

 
   

paragraph 2

is made

 
 

21

Tax falling within

Amount (not falling within any

The date falling 30 days after—

 
  

any of items 1 to 6 or

of items 17 to 19) shown in an

(a)   

the date by which the

 

40

  

9 to 11

amendment or correction of a

amount must be paid, or

 
   

return showing an amount

(b)   

the date on which the

 
   

falling within any of items 1 to 6

amendment or correction is

 
   

or 9 to 11

made,

 
    

whichever is later

 

45

 

22

Tax falling within

Amount (not falling within any

The date falling 30 days after—

 
  

any of items 1 to 6 or

of items 17 to 19) shown in an

(a)   

the date by which the

 
  

9 to 11

assessment or determination

amount must be paid, or

 
   

made by HMRC in circumstances

(b)   

the date on which the

 
   

other than those set out in

assessment or determin-

 

50

   

paragraph 2

ation is made,

 
    

whichever is later

 
 

Assessments and determinations in default of return

2          

The circumstances referred to in items 14, 16, 20 and 22 are where—

(a)   

P or another person is required to make or deliver a return falling

55

within any item in the Table in Schedule 55,

 
 

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Schedule 56 — Penalty for failure to make payments on time

408

 

(b)   

that person fails to make or deliver the return on or before by the date

by which it is required to be made or delivered, and

(c)   

if the return had been made or delivered as required, the return

would have shown that an amount falling within any of items 1 to 11

was due and payable.

5

Amount of penalty: occasional amounts and amounts in respect of periods of 6 months or more

3     (1)  

This paragraph applies in the case of—

(a)   

a payment of tax falling within any of items 1, 3 and 7 to 22 in the

Table,

(b)   

a payment of tax falling within item 2 or 4 which relates to a period

10

of 6 months or more, and

(c)   

a payment of tax falling within item 2 which is payable under

regulations under section 688A of ITEPA 2003 (recovery from other

persons of amounts due from managed service companies).

      (2)  

P is liable to a penalty of 5% of the unpaid tax.

15

      (3)  

If any amount of the tax is unpaid after the end of the period of 5 months

beginning with the penalty date, P is liable to a penalty of 5% of that amount.

      (4)  

If any amount of the tax is unpaid after the end of the period of 11 months

beginning with the penalty date, P is liable to a penalty of 5% of that amount.

4     (1)  

This paragraph applies in the case of a payment of tax falling within item 5

20

or 6 in the Table.

      (2)  

P is liable to a penalty of 5% of the unpaid tax.

      (3)  

If any amount of the tax is unpaid after the end of the period of 3 months

beginning with the penalty date, P is liable to a penalty of 5% of that amount.

      (4)  

If any amount of the tax is unpaid after the end of the period of 9 months

25

beginning with the penalty date, P is liable to a penalty of 5% of that amount.

Amount of penalty: PAYE and CIS amounts

5     (1)  

Paragraphs 6 to 8 apply in the case of a payment of tax falling within item 2

or 4 in the Table.

      (2)  

But those paragraphs do not apply in the case of a payment mentioned in

30

paragraph 3(1)(b).

6     (1)  

P is liable to a penalty under this paragraph of an amount determined by

reference to the number of defaults in relation to the same tax that P has

made during the tax year.

      (2)  

P makes a default in relation to a tax when P fails to pay an amount of that

35

tax in full on or before the date on which it becomes due and payable.

      (3)  

But the first failure during a tax year to pay an amount of tax does not count

as a default in relation to that tax during that tax year.

      (4)  

If P makes 1, 2 or 3 defaults during the tax year, P is liable to penalty of 1%

of the total amount of those defaults.

40

      (5)  

If P makes 4, 5 or 6 defaults during the tax year, P is liable to penalty of 2%

of the total amount of those defaults.

 
 

Finance Bill
Schedule 56 — Penalty for failure to make payments on time

409

 

      (6)  

If P makes 7, 8 or 9 defaults during the tax year, P is liable to penalty of 3%

of the total amount of those defaults.

      (7)  

If P makes 10 or more defaults during the tax year, P is liable to penalty of

4% of the total amount of those defaults.

      (8)  

In this paragraph—

5

(a)   

in accordance with sub-paragraph (1), the references in sub-

paragraphs (4) to (7) to a default are references to a default in relation

to the tax mentioned in sub-paragraph (3),

(b)   

the amount of a default is the amount which P fails to pay, and

(c)   

a default counts for the purposes of sub-paragraphs (4) to (7) even if

10

the default is remedied before the end of the tax year.

7          

If any amount of the tax is unpaid after the end of the period of 6 months

beginning with the penalty date, P is liable to a penalty of 5% of that amount.

8          

If any amount of the tax is unpaid after the end of the period of 12 months

beginning with the penalty date, P is liable to a penalty of 5% of that amount.

15

Special reduction

9     (1)  

If HMRC think it right because of special circumstances, they may reduce a

penalty under any paragraph of this Schedule.

      (2)  

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

(a)   

ability to pay, or

20

(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

25

(b)   

agreeing a compromise in relation to proceedings for a penalty.

Suspension of penalty during currency of agreement for deferred payment

10    (1)  

This paragraph applies if—

(a)   

P fails to pay an amount of tax when it becomes due and payable,

(b)   

before the date on which P becomes liable to any penalty for that

30

failure, P makes a request to HMRC that payment of the amount of

tax be deferred, and

(c)   

whether before or after that date, HMRC agrees that payment of that

amount may be deferred for a period (“the deferral period”).

      (2)  

If P would (apart from this sub-paragraph) become liable, during the

35

deferral period, to a penalty under any paragraph of this Schedule for failing

to pay that amount, P is not liable to that penalty.

      (3)  

But if—

(a)   

P breaks the agreement (see sub-paragraph (4)), and

(b)   

HMRC serves on P a notice specifying any penalty to which P would

40

become liable apart from sub-paragraph (2),

           

P becomes liable, at the date of the notice, to that penalty.

      (4)  

P breaks an agreement if—

 
 

Finance Bill
Schedule 56 — Penalty for failure to make payments on time

410

 

(a)   

P fails to pay the amount of tax in question when the deferral period

ends, or

(b)   

the deferral is subject to P complying with a condition (including a

condition that part of the amount be paid during the deferral period)

and P fails to comply with it.

5

      (5)  

If the agreement mentioned in sub-paragraph (1)(c) is varied at any time by

a further agreement between P and HMRC, this paragraph applies from that

time to the agreement as varied.

Assessment

11    (1)  

Where P is liable for a penalty under any paragraph of this Schedule HMRC

10

must—

(a)   

assess the penalty,

(b)   

notify P, and

(c)   

state in the notice the period in respect of which the penalty is

assessed.

15

      (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 notice of the

assessment 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

20

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

25

earlier assessment operated by reference to an underestimate of an amount

of unpaid tax.

      (5)  

A supplementary assessment may be made in respect of a penalty under

paragraph 6 if—

(a)   

notice of the assessment of the penalty was issued before the end of

30

the tax year, and

(b)   

before the end of the year, P makes a further default (so that the

penalty for the earlier default is increased).

12    (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 date B.

35

      (2)  

Date A is the last day of the period of 2 years beginning with the date

specified in or for the purposes of column 4 of the Table (that is to say, the

last date on which payment may be made without incurring a penalty).

      (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 amount of tax

40

in respect of which the penalty is assessed, or

(b)   

if there is no such assessment, the date on which that amount of tax

is ascertained.

      (4)  

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

(a)   

an appeal could be brought, or

45

 
 

 
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