What can happen when your tax return is more than 12 months
late
We have given you this factsheet because we believe that you may
have deliberately withheld information and that the information
withheld would have helped us to establish your correct tax
liability. ‘Tax liability’ means the amount of tax and
National Insurance contributions (NICs) that should have been shown
on your return.
This factsheet tells you about:
- the penalties we have already charged
- when we may increase the penalty percentage rate of the second
further penalty
- the different behaviours
- how we work out the amount of any increased penalty percentage
rate for deliberately withholding information
- why you should tell us about information that you have withheld
before we find out about it
- the penalty percentage range for deliberately withholding
information
- Managing Deliberate Defaulters
- what happens if you have a reasonable excuse
- what happens if we charge you a penalty
- what to do if you disagree
- your rights and obligations
- your rights when we are considering penalties.
The penalties we have already charged
Because you did not file your tax return on time we have already
charged you the following penalties:
- an initial penalty of £100 on the day after the date your
tax return was due
- daily penalties of £10 per day for 90 days
- a ‘further penalty’ of 5% of your tax liability, or
£300 (whichever was the higher) after your tax return was six
months late
- a second ‘further penalty’ of 5% of your tax
liability, or £300 (whichever was the higher) after your tax
return was 12 months late.
When we may increase the penalty percentage rate of the second
further penalty
In certain circumstances we may increase the percentage rate of
the second ‘further penalty’. We may do this if, by
failing to file your return within 12 months, you:
- withheld information, and
- knew that the information would help us to establish your
correct tax liability.
During our check we will establish whether you have withheld
information and if so, the reason why. We call this reason the
‘behaviour’. The different behaviours are explained on
the next page.
The different behaviours
Nondeliberate
This is where you didn’t know that, by failing to file your
tax return on time, information was being withheld from us that would
help us to establish your correct tax liability.
Deliberate
This is where you knew that, by failing to file your tax return on
time, information was being withheld that would help us to establish
your correct tax liability.
Deliberate and concealed
This is where you knew that information was being withheld that
would help us to establish your correct tax liability and you took
additional steps to conceal this. This is the most serious type of
failure and attracts the highest penalties.
How we work out the amount of any increased penalty percentage
rate for deliberately withholding information
We will not increase the percentage rate of the second
‘further’ penalty if your behaviour was
‘nondeliberate’. In such cases, the minimum penalty we
will charge is £300.
When we work out the amount of the increased penalty percentage
rate, we will consider:
- whether you told us that you had deliberately withheld
information or whether we found out ourselves. We refer to this as
an ‘unprompted’ or a ‘prompted’ disclosure.
This is explained later in this factsheet
- the assistance you gave us. We refer to this assistance as
‘quality of disclosure’ or ‘telling, helping and
giving’, which is explained below.
1. Telling us about the information you
have withheld
This could include:
- telling or agreeing with us that you withheld information
- telling us everything you can about the information that was
withheld as soon as you can.
2. Helping us to work out your correct
tax liability
This could include:
- using your own records to work out your correct tax
liability
- helping us understand your figures or records.
3. Giving us access to your records
This could include sending us your tax return or other documents
that help us work out your correct tax liability.
We will reduce the penalty by the maximum amount possible if we
agree that you have done everything you can to assist us. The amount
of telling, helping and giving that will be needed depends on the
circumstances in which the information was withheld. Sometimes we may
not need any extra help from you.
Why you should tell us about information that you have withheld
before we find out about it
If you know that you have withheld information, you should tell us
straightaway. If you tell us about information that you have withheld
before you had any reason to believe that we were about to find out
about it, we call this an ‘unprompted disclosure’. If you
tell us about information that you have withheld at any other time,
we call it a ‘prompted disclosure’.
The penalty percentage rate for unprompted disclosures, about any
information you have deliberately withheld, will be smaller than for
prompted disclosures.
The penalty percentage range for deliberately withholding
information
The table below shows the range of minimum and maximum penalty
percentages for each type of deliberate ‘behaviour’.
| Type of
behaviour |
| (why you withheld |
Unprompted |
Prompted |
| information) |
disclosure |
disclosure |
| Deliberate |
20% to 70% |
35% to 70% |
| Deliberate and |
30% to 100% |
50% to 100% |
| concealed |
|
|
Managing Deliberate Defaulters
If we charge you a penalty for deliberately withholding
information we may also need to monitor your tax affairs more
closely. We have an enhanced monitoring programme called Managing
Deliberate Defaulters. You can find more information about this in
factsheet CC/FS14 Managing Deliberate Defaulters. Details of
how you can get a copy are in the right hand panel of this
factsheet.
What happens if you have a reasonable excuse
We will not charge any penalties for filing your return late if
you had a reasonable excuse for doing so – as long as you then
filed your return without delay once the reasonable excuse had
ended.
A reasonable excuse is normally an unexpected or unusual event
that is either unforeseeable or beyond your control.
What is or is not a reasonable excuse depends on the
person’s abilities and circumstances. Those abilities and
circumstances may mean that what is a reasonable excuse for one
person may not be a reasonable excuse for another. If you think you
have a reasonable excuse please tell us. If we accept that your
excuse was a reasonable excuse, we will not charge a penalty.
What happens if we charge you a penalty
We will send you a calculation of the amount we believe is due. We
will try to agree this amount with you.
We will either send you a penalty assessment notice or we may ask
you to enter into a contract with us to pay the penalty together with
any tax or interest you owe us.
What to do if you disagree
When we make a decision that you can appeal against, we will write
to you to explain the decision and tell you what you need to do if
you disagree. You will usually have three options. Within 30 days you
can:
- send new information or arguments to the officer you have been
dealing with
- have your case reviewed by a different HMRC officer
- arrange for your case to be heard by an independent
tribunal.
You can find more about this in factsheet HMRC1 HM Revenue
& Customs decisions – what to do if you disagree.
Details of how you can get a copy are in the right hand panel of this
factsheet.
Your rights and obligations
- You have the right to be represented. You can appoint anyone to
act on your behalf. This includes professional advisers, friends,
and so on.
- You have the right to consult your adviser. We will allow a
reasonable amount of time for you to do so.
- We will protect information we obtain, receive or hold about
you.
- We can only ask you for what is reasonable for us to carry out
our compliance check. What is reasonable will depend on the
circumstances of the check.
- You have the right to complain if you believe that we have not
treated you fairly.
- You have an obligation to take care to get things right.
- If you have an adviser, you must still take reasonable care to
make sure that any returns, documents or details they send us on
your behalf are correct.
Your Charter explains what you can expect from us and
what we expect from you. For more information go to
www.hmrc.gov.uk/charter
Your rights when we are considering penalties
The European Convention on Human Rights gives you certain
important rights. If we are considering penalties we will tell you.
We will also tell you that these rights apply and ask you to confirm
that you understand them. These rights are explained below.
- If we ask you any questions to help us decide whether to charge
you a penalty, you have the right to not answer them. The amount of
help that you give us when we are considering penalties is entirely
a matter for you to decide.
- When deciding whether to answer our questions, you may want to
get advice from a professional adviser – particularly if you
do not already have one.
- If you disagree with us about the tax or any penalties that we
believe are due, you can appeal. If you appeal about both tax and
penalties, you have the right to ask for both appeals to be
considered together.
- You have the right to apply for funded legal assistance for
dealing with any appeal against certain penalties.
- You are entitled to have the matter of penalties dealt with
without unreasonable delay.
There is more information about these rights in CC/FS9
Human Rights Act.
If you need help
If you have any questions about this compliance check or
difficulty in obtaining any information mentioned in this factsheet,
please contact the office that wrote to you.
Which tax periods these penalty rules apply to
The penalty rules in this factsheet apply to tax returns for the
year 2011–12 or later.
Don't stop sending returns or making payments
During the compliance check, please carry on sending returns and
making payments when they are due.
Benefits, fees, grants and tax credits
If you are receiving any benefits, fees or grants that are based
on your income, and your income changes as a result of this
compliance check, you will need to tell the organisation that is
paying you.
If you are receiving tax credits and your income changes as a
result of this compliance check, you must tell the Tax Credit Office.
You can contact the Tax Credit helpline on 0845 300 3900. For
customers who are deaf, hearing or speech impaired, please phone
0845 300 3909 (textphone). Or you can write, marking your
envelope ‘Change of circumstances’ to:
Tax Credit Office
PRESTON
PR1 0SB
If you are selfemployed and fail to notify us that you are liable
to pay Class 2 National Insurance contributions, it may affect your
entitlement to some benefits in the future such as State Pension.
Customers with particular needs
If you need extra help to deal with this compliance check, please
let the officer that wrote to you know. For example, if:
- English is not your first language
- you would like us to use a certain format to communicate with
you, for example, Braille or Text Relay. If you use Text Relay by
textphone dial 18001 + number, by phone dial 18002 +
number
- you would like us to visit you at home because it is difficult
for you to get to one of our offices.
What if you are unhappy with our service
If you are unhappy with our service, please contact the person or
office you have been dealing with. They will try to put things right.
If you are still unhappy, they will tell you how to complain. Our
factsheet C/FS Complaints, also tells you how to make a
complaint. You can get a copy of this from our website. Go to
www.hmrc.gov.uk/factsheets/complaintsfactsheet.pdf You can
also go to our website and under Quick links select
Complaints & appeals.
If you prefer, you can write to:
Complaints Central Clearing
Team Manager
Ground Floor
1 Munroe Court
White Rose Office Park
LEEDS
LS11 0EA
You will need to tell us the reference number and the address of
the office that last wrote to you. Say exactly what you think has
gone wrong and what you think we should do to put it right.
This factsheet is one of a series
The factsheets marked with an asterisk (*) do not apply to excise
duties.
CC/FS1 General information
*CC/FS2 Requests for information and documents
*CC/FS3 Visits – Prearranged
*CC/FS4 Visits – Unannounced
*CC/FS5 Visits – Unannounced – Tribunal
approved
CC/FS6 What happens when we find something wrong
CC/FS7 Penalties for errors in returns or documents
CC/FS8(T) Help and advice (This relates to a specific type
of check. We will tell you if it applies to you.)
CC/FS9 Human Rights Act
CC/FS10 Suspending penalties for careless errors in returns or
documents
CC/FS11 Penalties for failure to notify
CC/FS12 Penalties for VAT and Excise wrongdoing
CC/FS13 Publishing details of deliberate defaulters
CC/FS14 Managing Deliberate Defaulters
CC/FS15 Self Assessment and old penalty rules
CC/FS16 Excise visits
CC/FS17 Higher penalties for Income Tax and Capital Gains Tax
involving offshore matters
CC/FS18(a) Late filing penalties for Income Tax and Capital
Gains Tax
CC/FS18(b) Late filing penalties for the Construction Industry
Scheme (CIS)
You can find these factsheets on our website. Go to
www.hmrc.gov.uk/compliance/factsheets.htm
If you prefer, you can ask the officer dealing with the check to
send any of them to you. You can get factsheet HMRC1 HM Revenue
& Customs decisions – what to do if you disagree
from our website. Go to
www.hmrc.gov.uk/factsheets/hmrc1.pdf
If you prefer, you can get one from our orderline by phoning
0845 900 0404.
Authorising a representative
You can authorise someone to deal with us on your behalf. This
includes professional tax advisers, friends or relatives. They can
deal with us just for a compliance check, or more permanently for
your daytoday tax affairs.
If you want to authorise a professional tax adviser, they will be
able to tell you more about this. If you want to authorise someone
other than a professional tax adviser, you will need to write to tell
us who you want to authorise and what you want them to deal with for
you.
These notes are for guidance only and reflect the position at the
time of writing. They do not affect any rights of appeal. Any
subsequent amendments to these notes can be found at
www.hmrc.gov.uk
Customer Information Team May 2012