ECH21045 - Penalties: Incorrect P11D or P9D Returns
Section 98(2) TMA 1970 provides a maximum penalty of £3,000 for each fraudulently or negligently ( ECH21050) incorrect return. Circumstances in which these penalties may be appropriate are
- the employer has refused to settle the employees' tax ( see example)
- there has been a previous voluntary settlement of liability on employees' benefits. Then a repetition of the situation in later years is discovered
- further benefits are discovered for the same period for which a previous voluntary settlement has been negotiated ( see example)
- very large cases (This text has been withheld because of exemptions in the Freedom of Information Act 2000)
- where errors or omissions appear to be a deliberate attempt by the employer to conceal employee benefits.
To arrive at an appropriate penalty in these cases you should
- calculate the tax underpaid
- apply the abatement process at ECH21060, but
- restrict any penalty where the result exceeds the statutory maximum ( ECH21095).
These penalties can be agreed locally (
ECH21120) and included in a contract
settlement.
If agreement on the proposed penalty can not be reached with
the employer/agent the papers will have to be submitted to the
Authorising Officer, via the Senior Manager and the Business Unit
Head for approval of formal penalty action (
ECH21135).
The case papers should always be sent with the submission
and should include
- a brief summary of the facts
- a computation of the tax arising from errors and omissions
- details of the maximum penalties involved,
for example
-
- the number of years involved, and
- the number of incorrect P11Ds in each of those years, and
- details of how the penalty has been calculated.
The Authorising Officer will advise on
- whether to proceed for penalties, and
- confirmation of the amount of penalty to seek.
In any cases of doubt and to save unnecessary submissions, contact TAA by telephone for advice (This text has been withheld because of exemptions in the Freedom of Information Act 2000)
