COM101001 - Penalties: penalty determinations: introduction

Where penalties are incurred they are charged under

• Paras 17 and 18 Schedule 18 FA 1998 for CTSA return periods

• Section 94 TMA 1970 for CT Pay and File return periods

Penalty determinations may be issued

• Automatically by COTAX
• Manually using function PPEN (Prepare Penalty Determinations)

• Using a combination of both methods, dependant upon the circumstances of the case

The amount of the penalty varies depending on the date that the company delivers the return.

Penalties are defined in Paras 17 and 18 Schedule 18 FA 1998 for CTSA return periods, as

• Flat-rate (Word 28kb) (equivalent to Fixed)

• Tax-related (Word 26kb) (equivalent to Tax geared)

They had no statutory name in TMA 1970, but were colloquially known as fixed and tax geared penalties for CT Pay and File return periods.

COTAX does not produce separate penalty output for CTSA and CT Pay and File periods, so all penalty output refers to flat-rate and tax-related penalties as appropriate. The terms have either their statutory or plain English meaning depending on the legal context.

You make the determinations under S100 TMA 1970 for failure to respond to a notice to deliver (Word 24.5kb) issued, requiring a return.

The notice of determination served on the company must state the

• Date of issue

• Time limit for making an appeal

You can use Function DAPD (Display AP Details) to view the details that COTAX used to calculate a flat-rate or tax-related penalty for an AP.

These details include

• Filing date (Word 38kb) 
• Revised or deferred filing dates
• The date of receipt of the return

You can also use Function DPEN (Display Penalty Determination) to view the details of any penalty determination issued.

A penalty determined under S100 TMA 1970 is due and payable

• Thirty days after the date of issue of the notice

Once a penalty determination has become final and conclusive it can only be amended

• When you accept a late appeal

• Under S100(6) TMA 1970 (where the amount ‘taken into account as the relevant amount of tax is or has become excessive’)

When the tax charge is reduced and the CT chargeable forms the basis for a tax-related penalty determination, COTAX automatically recalculates and issues the amended tax-related determination.

Note: COTAX provides support for late-filing penalties only. It does not cater for other types of penalties, such as those which may be due if a company fails to give notice of chargeability under Para 2 Sch 18 FA 98.