CH62770 - Penalties for failure to file on time: Types of penalties for failure to file on time: Returns for periods between 2 and 6 months: 12 month further penalties: Behaviour - examples

This page only applies to returns required for Machine Games Duty (MGD), Soft Drinks Industry Levy (SDIL) and Plastic Packaging Tax (PPT).

The following scenarios provide examples of different behaviours leading to deliberate withholding of information.

Example 1 - deliberate and concealed

Steve runs ‘Lucky Las Vegas’ for which he has the appropriate license from the local authority. Steve has been filing MGD returns by the due date for several years, but did not file the return for the period ended 31 December 2013. When we contacted Steve, he said that he had sold the machines, and therefore was not required to file a return. After lengthy enquiries into Steve’s trading activities it became apparent that Steve had moved those machines to another site but they were still being used.

Steve deliberately withheld information by not filing the returns, and concealed his liability.

Example 2 - deliberate but not concealed

Grandad’s Pop Ltd had a particularly busy three months following a TV feature on their soft drinks which were made to traditional recipes. Rather than pay their SDIL by the due date the director wanted to use the profits to increase production to meet increased demand. Consequently they did not file the SDIL return by the due date.

After we had contacted the company several times, he filed the overdue return. The director deliberately withheld the return because he knew he’d have a larger than usual SDIL liability, and he intended to use what he should have paid in SDIL to increase production, but he did not conceal his liability.

Example 3 - deliberate but not concealed

Plastics & Co manufacture virgin plastic trays for microwave meals and are registered for PPT. They get an order in where the customer wants their existing order, but in different sizes, which will increase the weight of the plastic they will need to account and pay tax for. They know the customer is due to pay on the same day they are due to submit the tax return and pay PPT. They need them to pay on time then they have the extra funds to pay the additional PPT due. When HMRC investigates they see Plastic & co had a downturn in orders recently, and they didn’t have the funds available by the tax due date. The manager explained to HMRC they needed to continue the business relationship with the customer and decided by delaying submitting the tax return would be the only way to keep afloat as once they got the funds, they would be able to submit the tax return and pay the tax due. All records produced to HMRC showed exactly how the manager had explained it. The business didn’t conceal their liability to account pay PPT, but deliberately submitted the tax return and paid the tax late.