CH81090 - In what circumstances is a penalty payable: Under-assessment by HMRC

This guidance applies to returns and documents with a filing date on or after 1 April 2009 where the return covers a tax period beginning on or after 1 April 2008 seeCH81011for full details.

HMRC will issue an estimated assessment of a person’s liability where

• a return has been issued to the person and it has not been returned, or
• a person is required to deliver a return to HMRC but it is not delivered.

We will charge a penalty where

• an assessment we issued in these circumstances understates a person’s liability to income tax, capital gains tax, corporation tax, or VAT, and
• the person fails to take reasonable steps within 30 days of the date of the assessment to tell us that it is an under-assessment of their liability.

For further guidance on under-assessments see CH81170.

A person who sends their return in on time will not receive an assessment of estimated liability because they will have self-assessed and so this penalty will not apply.