SolvedCTM94240 | CTSA: penalties for late returns: More than one tax-related penalty for the same accounting period
From HM Revenue & Customs · Company Taxation Manual
FA98/SCH18/PARA90 (TMA70/S97A)
Companies may be liable to two or more tax-related penalties in relation to the same amount of CT.
For example, a penalty can arise under both FA98/SCH18/PARA18 and FA98/SCH18/PARA20.
When a company incurs more than one tax-related penalty for the same accounting period,then only one such penalty, whichever is the greater or greatest, is imposed on each slice of relevant tax.
Example
| Company tax return | - |
|---|---|
| Filing date | 30 September 2000 |
| Accounts and return filed | 1 May 2001 |
| Tax payable | £25,000 |
| Paid by 31 March 2001 (18 months after the filing date) | £5000 |
| Unpaid tax at 18 month point | £20,000 |
| Paragraph 18 tax-related penalty based on unpaid tax at 31 March 2001 | £20000 x 10% = £2000 |
| Enquiries establish negligent submission of incorrect accounts. Revised tax payable | £30,000 |
| Paragraph 20 maximum penalty | £30000 - £25000 = £5000 |
Using an agreed penalty abatement for the Paragraph 20 penalty, the penalty calculation is:
| Penalty | - |
|---|---|
| Paragraph 18 penalty £20,000 x 10% = | £2,000 |
| Paragraph 20 penalty £ 5,000 x 30% = | £1,500 |
| Total | £3,500 |
If there had been no Paragraph 20 culpability attaching to the additional £5000.00 the total Paragraph 18 penalty would have been 25000 X 10% = £2,500