ECH21100 - Penalties: Time Limits

There are time limits for penalty proceedings. The limits are specified in Section 103 TMA 1970.

The basic rule is that penalty proceedings must be started within six years of the date on which the penalty was incurred.

In the case of a failure offence ECH21005 the penalty is incurred on the day after the deadline for action. For example, the day after the return filing date, so if a return is due on 19 May 2000 the penalty is incurred on 20 May 2000.

In the case of a return error penalty offence ECH21005 the penalty is incurred on the day the return is submitted.

Where the penalty is tax/NICs geared the time limit for penalty action is extended to three years after the tax/NICs is finally determined. This means three years after the Regulation 80 determination/Section 8 NIC decision becomes final and conclusive.

It follows that in any case where HM Revenue & Customs have not yet made a formal Regulation 80 determination ECH22090 or Section 8 NIC decision ECH22091 the three year extension has not even begun to run for penalties.

There are of course separate time limits for Regulation 80 determinations and Section 8 NIC decisions.

Wherever the penalty is based on 100% of the tax/NICs difference or the tax/NICs underpaid it is accepted that it is subject to Article 6 of ECHR ( ECH8026). Where this is the case you should

• provide HRA advice and
• issue factsheet EC/FS4

to the employer at the earliest opportunity. ( ECH8027)

You must also ensure that the case is worked without unreasonable delay.