COM100070 - Penalties: late delivery of returns: interaction of flat-rate and tax-related penalties

Flat-rate (Word 32KB) penalties are due under

• Para 17(1) Schedule 18 FA 1998 for CTSA return periods

And

• S94(1) TMA 1970 for CT Pay and File return periods

Tax-related (Word 30KB) penalties are due under

• Para 18 Schedule 18 FA 1998 for CTSA return periods

And

• S94(6) TMA 1970 for CT Pay and File return periods

The charging of tax-related penalties due does not affect the flat-rate penalty position. You can charge a penalty under both of the relevant sub sections in relation to the same return.

Usually, a flat-rate penalty arises before a tax-related penalty, but it is possible for a company to incur penalties under both sub sections at the same time.

A company incurs a flat-rate penalty on the day following the filing date (Word 42KB). It usually incurs a tax-related penalty on the day following the expiry of eighteen months after the end of the return period (Word 28KB), based on the amount of tax unpaid (Word 41KB) at the 18 month point.

In exceptional circumstances, as explained in subject ‘Tax-Related Penalties’ (COM100110), the filing date may not have been reached at the 18 month point. In that case the tax-related penalty also arises on the day following the filing date.

For a CT Pay and File AP, although a company does not incur a tax-related penalty until after the 18 month point in these circumstances, the calculation of the penalty is still based upon the amount of tax unpaid at the 18 month point.

If exceptionally for a CTSA AP, the filing date for the return is more than 18 months after the end of the AP, then the penalty is based upon the tax unpaid at that later date. See subject ‘Making Penalty Determinations’ (COM101050) in this business area.

For legislation applying to this subject, see COM100013