IPTM4380 | Purchased life annuities: penalties for failure to comply

Penalties

If the relevant person - see IPTM4350 - does not comply with the requirements of The Income Tax (Purchased Life Annuities) Regulations 2008 (SI 2008/562) they are liable for penalties. The penalties that may be imposed are listed in TMA70/S98 with guidance in IPTM7245. There is a maximum initial penalty of £300 and a maximum continuing penalty of £60 per day for each day that the failure continues after the initial penalty has been imposed. There is a maximum penalty of £3,000 where the relevant person has issued an incorrect form PLA6 through negligence on its part.

Audits

HMRC has the power to audit any person to whom premiums under an annuity are or have at any time been payable.

In the event of an audit any documents (in any format, whether books, records or information) that may be needed in order to check that the requirements of legislation, including regulations, have been met, must be made available for inspection.

As part of the audit all internal guidance notes of the non-UK insurer or their tax representative relating to the partial exemption scheme whether computerised or manual also need to be made available.