SCHEDULES
C5C6C2SCHEDULE 41Penalties: failure to notify and certain VAT and excise wrongdoing
Sch. 41 applied (with modifications) (22.7.2020) by Finance Act 2020 (c. 14), Sch. 16 para. 11(6) (with Sch. 16 para. 11(7))
Sch. 41 applied (with modifications) (22.7.2020) by Finance Act 2020 (c. 14), Sch. 16 para. 13
Potential lost revenue
I4C1C47
1
“The potential lost revenue” in respect of a failure to comply with a relevant obligation is as follows.
F91A
In the case of an obligation under section 7 of TMA 1970 which arises by virtue of subsection (1B) of that section, the potential lost revenue is so much of any income tax or capital gains tax to which P is liable in respect of the tax year in question as is, by reason of the failure to comply with the obligation—
a
where the period specified in subsection (1C)(b)(ii) of that section applies and ends after the relevant date, unpaid at the end of that period, or
b
in any other case, unpaid on the relevant date.
1B
For the purposes of sub-paragraph (1A) the relevant date is—
a
31 January following the tax year, or
b
if, after that date, HMRC refund a payment on account in respect of the tax year to P, the day after the refund is issued.
2
In the case of a relevant obligation relating to income tax or capital gains tax and a tax year F5 (not falling within sub-paragraph (1A)), the potential lost revenue is so much of any income tax or capital gains tax to which P is liable in respect of the tax year as by reason of the failure is unpaid on 31 January following the tax year.
3
In the case of a relevant obligation relating to corporation tax and an accounting period, the potential lost revenue is (subject to sub-paragraph (4)) so much of any corporation tax to which P is liable in respect of the accounting period as by reason of the failure is unpaid 12 months after the end of the accounting period.
4
F124A
In the case of a relevant obligation relating to diverted profits tax, the potential lost revenue is the amount of diverted profits tax for which P would be liable at the end of the period of 6 months beginning immediately after the accounting period assuming—
a
a charge to diverted profits tax had been imposed on P on the taxable diverted profits arising to P for the accounting period, and
b
that tax was required to be paid before the end of that period of 6 months.
F104B
In the case of a relevant obligation relating to digital services tax and an accounting period, the potential lost revenue is so much of any digital services tax payable by members of the group for the accounting period as by reason of the failure is unpaid 12 months after the end of the accounting period.
F135
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6
7
“The relevant period” is—
a
in relation to a failure to comply with paragraph 14(2) or (3) of Schedule 1 to VATA 1994 F2... or paragraph 7(2) or (3) of Schedule 3A to that Act, the period beginning on the date of the change or alteration concerned and ending on the date on which HMRC received notification of, or otherwise became fully aware of, that change or alteration, and
b
in relation to a failure to comply with an obligation under any other provision, the period beginning on the date with effect from which P is required in accordance with that provision to be registered and ending on the date on which HMRC received notification of, or otherwise became fully aware of, P's liability to be registered.
F168
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F68A
In the case of a relevant obligation under section 47 of FA 1996 (which relates to landfill tax), the potential lost revenue is the amount of tax (if any) for which P is liable for the period—
a
beginning with the date with effect from which P is required in accordance with that section to be registered or (as the case may be) from which the Commissioners may register P under that section, and
b
ending with the day on which HMRC received notification of, or otherwise became fully aware of, P's liability to be registered or (as the case may be) the Commissioners' power to register P.
9
In the case of a relevant obligation under any provision relating to insurance premium tax, F17plastic packaging tax, aggregates levy, climate change levy F1... or air passenger duty, the potential lost revenue is the amount of the tax (if any) for which P is liable for the period—
a
beginning on the date with effect from which P is required in accordance with that provision to be registered, and
b
ending on the date on which HMRC received notification of, or otherwise became fully aware of, P's liability to be registered.
10
In the case of a failure to comply with a relevant obligation relating to any other tax, the potential lost revenue is the amount of any tax which is unpaid by reason of the failure.
I58
In the case of the making of an unauthorised issue of an invoice showing VAT, the potential lost revenue is the amount shown on the invoice as value added tax or the amount to be taken as representing value added tax.
I29
In the case of—
a
the doing of an act which enables HMRC to assess an amount of duty as due under a relevant excise provision, or
b
supplying a product knowing that it will be used in a way which enables HMRC to assess an amount as duty due from another person under a relevant excise provision,
the potential lost revenue is the amount of the duty which may be assessed as due.
F149A
In the case of the doing of an act which enables HMRC to assess an amount of landfill tax as due under section 50A of FA 1996, the potential lost revenue is the amount of the tax which may be assessed as due.
I310
In the case of acquiring possession of, or being concerned in dealing with, goods the payment of duty on which is outstanding and has not been deferred F3or (as the case may be) chargeable soft drinks in respect of which a payment of soft drinks industry levy is due and payable and has not been paid, the potential lost revenue is an amount equal to the amount of duty due on the goods.
I1C311
1
In calculating potential lost revenue in respect of a relevant act or failure on the part of P no account is to be taken of the fact that a potential loss of revenue from P is or may be balanced by a potential over-payment by another person (except to the extent that an enactment requires or permits a person's tax liability to be adjusted by reference to P's).
2
In this Schedule “a relevant act or failure” means—
a
a failure to comply with a relevant obligation,
b
the making of an unauthorised issue of an invoice showing VAT,
c
the doing of an act which enables HMRC to assess an amount of duty as due under a relevant excise provision or supplying a product knowing that it will be used in a way which enables HMRC to assess an amount as duty due from another person under a relevant excise provision, or
d
acquiring possession of, or being concerned in dealing with, goods the payment of duty on which is outstanding and has not been deferred F8or (as the case may be) chargeable soft drinks in respect of which a payment of soft drinks industry levy is due and payable and has not been paid.
Sch. 41 modified (with effect in accordance with s. 42(2), Sch. 12 para. 29(1) of the amending Act) by Finance Act 2018 (c. 3), Sch. 12 paras. 33, 34