SolvedUTT17200 | Penalties: types of penalty
From HM Revenue & Customs · Uncertain Tax Treatments by Large Businesses Manual
A single penalty is chargeable in respect of a notification requirement. Where there are multiple failures in respect of a notification requirement only one penalty is chargeable.
The penalty amount varies according to whether it is:
a first failure, resulting in a penalty of £5,000, where the company or partnership has not, in any of the preceding three financial years, been assessed to a notification penalty in respect of the same relevant tax.
a second failure, resulting in a penalty of £25,000, where the company or partnership has been assessed to a first failure notification penalty and not already incurred a second penalty in the preceding three financial years in respect of the same relevant tax.
a further failure, resulting in a penalty of £50,000, where the company or partnership has been assessed to a second penalty or further failure penalty in the preceding three financial years in respect of the same relevant tax.
Example
The table below illustrates how the first failure, second failure and further failure penalties operate.
| Financial Year End | VAT | Corporation tax | PAYE | Income Tax Self-Assessment |
|---|---|---|---|---|
| 30 Sep 2023 | First Failure Penalty £5,000 | First Failure Penalty £5,000 | Notification requirements met | Notification requirement met |
| 30 Sep 2024 | Notification requirements met | Notification requirements met | Notification requirements met | Notification requirement met |
| 30 Sep 2025 | Second Failure Penalty £25,000 | Notification requirements met | First Failure Penalty £5,000 | Notification requirement met |
| 30 Sep 2026 | Notification requirements met | Notification requirements met | Notification requirements met | Notification requirement met |
| 30 Sep 2027 | Further Failure Penalty £50,000 | Notification requirements met | Notification requirements met | Notification requirement met |
| 30 Sep 2028 | Notification requirements met | First Failure Penalty £5,000 | Second Failure Penalty £25,000 | Notification requirement met |
| 30 Sep 2029 | Notification requirements met | Notification requirements met | Notification requirements met | Notification requirement met |
| 30 Sep 2030 | Further Failure Penalty £50,000 | Second Failure Penalty £25,000 | Notification requirements met | Notification requirement met |
If a penalty is chargeable that is the amount of the penalty. There is no reduction available for any reason.
If there has been a failure but there is a reasonable excuse for the failure, there will be no penalty. However, there can be no reasonable excuse for a notification failure that results from careless or deliberate behaviour.