ECH21108 - Penalties: Failure to Produce Records

There are several legislative requirements for an employer or contractor to produce records. The main ones used for employers, contractors and subcontractors are

• Regulation 97 Income Tax (PAYE) Regulations 2003 for PAYE records
• Para 26 Schedule 4 Social Security (Contributions) Regulations 2001 for National Insurance Records
• Regulations 51/52 Income Tax (Construction Industry Scheme) Regulations 2005 for Construction Industry Scheme records from 06-04-07.

Where an employer or contractor still fails to produce records after all reasonable efforts have been made to persuade them to comply ( ECH7110 and ECH3550) penalties may be sought under TMA 1970 Section 98(1).

The penalty provision for failing to produce records under Reg 97 is S98(1)(b).

The penalty provision for failing to produce records under Reg 51/52 is S98(1)(a).

Both provisions provide for

• an initial penalty not exceeding £300

and, if the failure continues

• a continuing penalty not exceeding £60 for each further day.

The initial penalty can only be imposed by the General or Special Commissioners.

The continuing daily penalty can be determined by an authorised Officer of the Board (Local Grade 6).

An initial penalty under S98(1)(a) cannot be determined after the failure has been made good. However, this differs where the penalty arises under S98(1)(b), which allows for the initial penalty to be determined even if the failure has been remedied.

In no circumstances can daily penalties be determined after the failure has been made good.

When proceeding to seek penalties for failure to produce records the caseworker should follow the guidance at ECH21136.

In cases of doubt or difficulty advice should be sought from TAA (Newcastle).