CH401223 | Charging penalties: introduction: penalties for failure to file returns on time - FA09/Sch55: higher 12 month penalty for deliberate withholding of information

When a return (excluding PAYE Real Time Information (RTI) returns) was not filed within 12 months of the filing date and you establish that, by failing to make the return, the person deliberately withheld information which would have enabled or assisted HMRC to assess their correct liability to tax, the 12 month 5% penalty assessed by SA (Self Assessment), CIS (Construction Industry Scheme) or ETMP needs to be increased to a higher percentage rate that reflects that behaviour.

This higher behaviour-based penalty is assessed using the National Penalty Processing System (NPPS), see CH407500.

The maximum penalty for failure to file is 70% of the liability to tax if the behaviour was deliberate and 100% if it was both deliberate and concealed.

The penalty can be up to 200% for offshore matters, see CH112100.

Where a person discloses that they deliberately withheld information, the penalty percentage is reduced to reflect the timing, nature and extent of their disclosure, subject to minimums set according to the type of behaviour and whether the disclosure was unprompted or prompted, see CH63100.

In CIS, the penalty percentages are underpinned by a minimum penalty of £1,500 for deliberate withholding of information and £3,000 for deliberate and concealed withholding.

In cases involving CIS returns only relating to gross payments, the 12 month penalty should be increased if you establish that, by failing to file the return on time, the person deliberately withheld information relating to persons registered for gross payment. As there is no tax liability on which to calculate a tax-geared penalty, the penalty is a fixed amount of £1,500 for deliberate withholding of information and £3,000 for deliberate and concealed withholding of information.

There are no 12 month further penalties for outstanding PAYE RTI returns.