ECH21040 - Penalties: Incorrect End of Year Returns

Section 98A(4) TMA 1970 provides a tax, NIC geared penalty for fraudulently or negligently submitting an incorrect End of Year return ECH21050.

The maximum penalty before abatements is an amount equal to the difference between the tax and NIC liability returned and the tax, NIC liability which should have been returned.

For example, a form P35 which returns £8,000

• where it is later demonstrated that
• £14,000 of tax and NICs should have been returned
• attracts a maximum penalty before abatements of £6,000.

Note that these penalties are based on 100% of the tax / NICs difference or the tax / NICs underpaid and are subject to Article 6 of ECHR ( ECH8026)

You should

• provide HRA advice and
• issue factsheet EC/FS4

to the employer/contractor at the earliest opportunity. ( ECH8027)

If it has been necessary to issue formal determinations or decisions consideration should be given to making penalty determinations ( ECH21135) at the same time and listing all appeals for the same Commissioners hearing.