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CTM94200 | CTSA: penalties for late returns: Determination: Procedure

From HM Revenue & Customs · Company Taxation Manual

Penalties incurred under FA98/SCH18/PARA17 and 18 are charged by formal determination. The notice of determination served on the company must state:

  • the date of issue,

and

  • the time within which the company may appeal.

COTAX deals with these determinations.

Penalties under PARA17 and PARA18 are charged for each failure to deliver a return by the filing date. A notice to deliver can require the delivery of a return for more than one return period so more than one penalty can be due in respect of a single notice.

Examples 1 and 2 below contain examples of this. In both examples the company incurs the penalties in respect of the same PARA3 notice and they are normally charged in the same determination.

Example 1

In this example the company incurs the penalties in respect of the same Paragraph 3 notice and they are normally charged in the same determination.

  • Company A makes up accounts for the year to 31 December 2018.

  • It ceases trading on 30 September 2018 but continues to receive investment income after that date.

  • Accounting periods end on 30 September 2018 and 31 December 2018.

  • A Paragraph 3 notice specifying the period 1 January 2018 to 31 December 2018 is served on 1 April 2019.

  • The company must file a return for both the accounting periods ended 30 September 2018 and 31 December 2018.

  • It fails to deliver both returns until 1 February 2020.

The company is liable to a flat-rate penalty of:

  • £100 for failing to deliver its return for the accounting period to 30 September 2018 by the filing date, 31 December 2019,

  • £100 for failing to deliver its return for the accounting period to 31 December 2018 by the same filing date.

Example 2

In this example the company incurs the penalties in respect of the same Paragraph 3 notice and they are normally charged in the same determination.

  • Company B makes up its accounts for the 12 months to 31 December 2018 and 3 months to 31 March 2019, both of which are accounting periods.

  • A notice to deliver is served on 1 July 2019, specifying the period 1 April 2018 to 31 March 2019.

  • The company must file a return for both the accounting periods ended 31 December 2018 and 31 March 2019.

  • The company delivers both returns on 1 May 2020.

The company is liable to a flat-rate penalty of:

  • £200 for failing to deliver the return for the year to 31 December 2018 within three months of the filing date (31 December 2019),

  • £100 for failing to deliver its return for the period to 31 March 2019 by the filing date (31 March 2020).