Finance Act 2021

PART 3 U.K. Supplementary provision

Reasonable excuse U.K.

19 (1) Liability to a penalty point or a penalty under this Schedule does not arise in respect of a failure to make a return if the person satisfies HMRC (or on appeal, the tribunal) that the person had a reasonable excuse for the failure. U.K.

(2) For this purpose—

(a) an insufficiency of funds is not a reasonable excuse unless attributable to events outside the person's control,

(b) where the person relies on another person to do anything, that is not a reasonable excuse unless the first person took reasonable care to avoid the failure, and

(c) where the person had a reasonable excuse for the failure but the excuse has ceased, the person is to be treated as having continued to have the excuse if the failure is remedied without unreasonable delay after the excuse ceased.

(3) In this paragraph “tribunal” means the First-tier Tribunal or Upper Tribunal (as appropriate by virtue of paragraph 23(1)).

Commencement Information

I1 Sch. 24 para. 19 in force at 1.1.2023 for specified purposes by S.I. 2022/1278, reg. 2(1)

I2 Sch. 24 para. 19 in force at 6.4.2024 for specified purposes by S.I. 2024/440, reg. 2(1)

Double jeopardy U.K.

20 U.K. A person is not liable to a penalty point or a penalty under this Schedule in respect of a failure in respect of which the person has been convicted of an offence.

Commencement Information

I3 Sch. 24 para. 20 in force at 1.1.2023 for specified purposes by S.I. 2022/1278, reg. 2(1)

I4 Sch. 24 para. 20 in force at 6.4.2024 for specified purposes by S.I. 2024/440, reg. 2(1)

Withdrawal of notice to make a return U.K.

21 (1) This paragraph applies where— U.K.

(a) a person is liable to a penalty point or a penalty under this Schedule in relation to a failure to make a return in paragraph (1) or (2) of group 1A or 1B, and

(b) HMRC decide (on the request of the person or otherwise) to give the person a notice under section 8B of TMA 1970 withdrawing a notice under section 8 of that Act.

(2) This paragraph also applies where—

(a) the trustees of a settlement are, as a deemed single person (see paragraph 26), liable to a penalty point or a penalty under this Schedule in relation to a failure to make a return in paragraph (1) or (2) of group 2A or 2B, and

(b) HMRC decide (on the request of a trustee of the settlement or otherwise) to give a trustee of the settlement a notice under section 8B of TMA 1970 withdrawing a notice under section 8A of that Act.

(3) This paragraph also applies where—

(a) the partners in a partnership are, as a deemed single person (see paragraph 25), liable to a penalty point or a penalty under this Schedule in relation to a failure to make a return in paragraph (1) or (2) of group 3A, and

(b) HMRC decide, on a request by a partner in the partnership under section 12AAA of TMA 1970, to give a notice under that section withdrawing a notice under section 12AA of that Act.

(4) The notice under section 8B or 12AAA of TMA 1970 may include provision cancelling liability to the penalty point or the penalty.

Commencement Information

I5 Sch. 24 para. 21 in force at 1.1.2023 for specified purposes by S.I. 2022/1278, reg. 2(1)

I6 Sch. 24 para. 21 in force at 6.4.2024 for specified purposes by S.I. 2024/440, reg. 2(1)

Appeals U.K.

22 U.K. A person may appeal against a decision of HMRC under this Schedule—

(a) that the person is liable to a penalty point, or

(b) that a penalty is payable by the person.

Commencement Information

I7 Sch. 24 para. 22 in force at 1.1.2023 for specified purposes by S.I. 2022/1278, reg. 2(1)

I8 Sch. 24 para. 22 in force at 6.4.2024 for specified purposes by S.I. 2024/440, reg. 2(1)

23 (1) An appeal under paragraph 22 is to be treated in the same way as an appeal against an assessment to the tax concerned (including by the application of any provision about bringing the appeal by notice to HMRC, about HMRC's review of the decision or about determination of the appeal by the First-tier Tribunal or Upper Tribunal). U.K.

(2) Sub-paragraph (1) does not apply—

(a) so as to require the person to pay a penalty before an appeal against the assessment of the penalty is determined, or

(b) in respect of any other matter expressly provided for by this Schedule.

Commencement Information

I9 Sch. 24 para. 23 in force at 1.1.2023 for specified purposes by S.I. 2022/1278, reg. 2(1)

I10 Sch. 24 para. 23 in force at 6.4.2024 for specified purposes by S.I. 2024/440, reg. 2(1)

24 (1) On an appeal under paragraph 22 that is notified to the tribunal, the tribunal may— U.K.

(a) where the appeal is under paragraph 22(a), affirm or cancel HMRC's decision that the person is liable to the penalty point;

(b) where the appeal is under paragraph 22(b), affirm or cancel HMRC's decision that the penalty is payable by the person.

(2) Where the appeal is under paragraph 22(b), the tribunal may also affirm or cancel HMRC's decision that the person was liable to any of the penalty points by virtue of which the person was liable to the penalty.

(3) Sub-paragraph (2)—

(a) applies in relation to a penalty point even if the time limit for appealing against it expired before the appeal under paragraph 22(b) was brought;

(b) does not apply in relation to a penalty point if HMRC's decision that the person was liable to the penalty point was affirmed on an earlier appeal.

(4) Sub-paragraph (5) applies if—

(a) on an appeal under paragraph 22(b), the tribunal—

(i) cancels a decision that a penalty is payable by a person, and

(ii) cancels a decision that the person was liable to a penalty point, for a group of returns, by virtue of which the person was liable to the penalty,

(b) after the penalty point mentioned in paragraph (a)(ii) was given by HMRC and before the decision mentioned in that paragraph was cancelled, the person failed to make a return in the same group on or before the due date, and

(c) at the time the failure occurred, the person already had the maximum number of penalty points for that group of returns (see paragraph 5(8)).

(5) HMRC may award a penalty point in respect of the failure before the end of the period of 12 months beginning with the day after the tribunal's decision on the appeal (and paragraph 6(3) does not apply).

(6) In this paragraph “tribunal” means the First-tier Tribunal or Upper Tribunal (as appropriate by virtue of paragraph 23(1)).

Modifications etc. (not altering text)

C1 Sch. 24 para. 24(4)(5) applied (with modifications) (1.1.2023 for specified purposes, 6.4.2024 for specified purposes) by 1994 c. 23, s. 83FB (as inserted by Finance Act 2021 (c. 26), s. 118(2), Sch. 27 para. 26; S.I. 2022/1278, reg. 2(3)(4)(a); S.I. 2024/440, reg. 2)

C2 Sch. 24 para. 24(4)(5) applied (with modifications) (6.4.2024 for specified purposes) by 1970 c. 9, s. 49FA(1) (as inserted by Finance Act 2021 (c. 26), s. 118(2), Sch. 27 para. 6; S.I. 2024/440, reg. 2)

Commencement Information

I11 Sch. 24 para. 24 in force at 1.1.2023 for specified purposes by S.I. 2022/1278, reg. 2(1)

I12 Sch. 24 para. 24 in force at 6.4.2024 for specified purposes by S.I. 2024/440, reg. 2(1)

Partnerships U.K.

25 (1) For the purposes of this Schedule— U.K.

(a) the partners in a partnership are together to be treated as if they were a single person (distinct from the persons who are partners in the partnership);

(b) a failure by one or more partners in the partnership to make a return on or before the due date is to be treated as a failure by the deemed single person referred to in paragraph (a);

(c) other things done by or in relation to a partner in the partnership are also to be treated as done by or in relation to that deemed single person.

(2) The deemed single person referred to in paragraph (a) is to be treated as continuing in existence even if there is a change in the partnership.

(3) Where the deemed single person referred to in paragraph (a) is assessed to a penalty, every relevant partner is jointly and severally liable for the penalty.

(4) For the purposes of sub-paragraph (3)—

(a) “relevant partner” means a person who is a partner in the partnership on the day on which the penalty is assessed;

(b) a person is a relevant partner even if the person was not a partner in the partnership when liability was incurred to one or more of the penalty points by virtue of which liability to the penalty arose;

(c) the relevant partners are jointly and severally liable for the penalty even if none of them were partners in the partnership when liability was incurred to the penalty points by virtue of which liability to the penalty arose.

Commencement Information

I13 Sch. 24 para. 25 in force at 1.1.2023 for specified purposes by S.I. 2022/1278, reg. 2(1)

I14 Sch. 24 para. 25 in force at 6.4.2024 for specified purposes by S.I. 2024/440, reg. 2(1)

Settlements U.K.

26 (1) For the purposes of this Schedule— U.K.

(a) the trustees of a settlement are together to be treated as if they were a single person (distinct from the persons who are trustees of the settlement);

(b) a failure by one or more trustees of the settlement to make a return on or before the due date is to be treated as a failure by the deemed single person referred to in paragraph (a);

(c) other things done by or in relation to a trustee of the settlement are also to be treated as done by or in relation to that deemed single person.

(2) The deemed single person referred to in paragraph (a) is to be treated as continuing in existence even if there is a change in the trustees of the settlement.

(3) Where the deemed single person referred to in paragraph (a) is assessed to a penalty, every relevant trustee is jointly and severally liable for the penalty.

(4) For the purposes of sub-paragraph (3)—

(a) “relevant trustee” means a person who is a trustee of the settlement on the day on which the penalty is assessed;

(b) a person is a relevant trustee even if the person was not a trustee of the settlement when liability was incurred to one or more of the penalty points by virtue of which liability to the penalty arose;

(c) the relevant trustees are jointly and severally liable for the penalty even if none of them were trustees of the settlement when liability was incurred to the penalty points by virtue of which liability to the penalty arose.

Commencement Information

I15 Sch. 24 para. 26 in force at 1.1.2023 for specified purposes by S.I. 2022/1278, reg. 2(1)

I16 Sch. 24 para. 26 in force at 6.4.2024 for specified purposes by S.I. 2024/440, reg. 2(1)