ECH21020 - Penalties: Failure to Submit an End of Year Return - First 12 Months of Lateness

Section 98A(2)(a) TMA 1970

Although penalties for the first 12 months of lateness are routinely dealt with by End of Year Sections with the support of an ECS program the caseworker may still become involved.

Caseworker involvement in these penalties will usually be restricted to those cases where RISK has to

• open a new scheme or
• reopen a permanently cancelled scheme

for the review to take place or where

• the scheme has been COYO
• and the caseworker discovers that the employer/contractor has failed to submit a return.

However the caseworker should

• ensure that penalties have been considered in any case where they identify that there has been a failure to submit a return by its due date.

Where EC/CIT staff pursue this penalty they should ensure the EOY Section do not duplicate it.

The penalty is fixed at £100 per month or part month for each batch or part batch of 50 employees/subcontractors. For example,

A P35 return of 53 employees which is late by 4 months 15 days.

The penalty is £1,000, that is

£200 x 5 (4 months + 1 part month) = £1,000.

By concession the penalty is ‘capped’ to the total liability payable at 19th April following the end of the tax year, subject to a minimum penalty of £100.

Thus in this example if the return remained outstanding for 11 months the penalty would have increased to £2,200. However, if the total liability payable was only £1,700 the penalty would be ‘capped’ at £1,700.

If the failure goes beyond 12 months then in addition penalties under Section 98A(2)(b) may also be considered ECH21025.