Tax Collection and Management (Wales) Act 2016

Valid from 01/04/2018

CHAPTER 2 E+W PENALTIES FOR FAILURE TO MAKE RETURNS OR PAY TAX

Penalty for failure to make tax return E+W

118 Penalty for failure to make tax return on or before filing date E+W

A person is liable to a penalty of £100 if the person fails to make a tax return on or before the filing date.

119 Penalty for failure to make tax return within 6 months from filing date E+W

(1) A person is liable to a penalty if the person's failure to make a tax return continues after the end of the period of 6 months beginning with the day after the filing date.

(2) The penalty is the greater of—

(a) 5% of the amount of the devolved tax to which the person would have been liable if the tax return had been made, and

(b) £300.

120 Penalty for failure to make tax return within 12 months from filing date E+W

(1) A person is liable to a penalty if the person's failure to make a tax return continues after the end of the period of 12 months beginning with the day after the filing date.

(2) Where, by failing to make the tax return, the person deliberately withholds information which would enable or assist WRA to assess the person's liability to a devolved tax, the penalty is the greater of—

(a) 100% of the amount of the devolved tax to which the person would have been liable if the tax return had been made, and

(b) £300.

(3) In any case not falling within subsection (2), the penalty is the greater of—

(a) 5% of the amount of the devolved tax to which the person would have been liable if the tax return had been made, and

(b) £300.

121 Reduction in penalty for failure to make tax return: disclosure E+W

(1) WRA may reduce a penalty under section 118, 119 or 120 if the person discloses information which has been withheld as a result of a failure to make a tax return (“relevant information”).

(2) A person discloses relevant information by—

(a) telling WRA about it,

(b) giving WRA reasonable help in quantifying any devolved tax unpaid by reason of the information having been withheld, and

(c) allowing WRA access to records for the purpose of checking how much devolved tax is so unpaid.

(3) In reducing a penalty under this section, WRA may take account of—

(a) whether the disclosure was prompted or unprompted, and

(b) the quality of the disclosure.

(4) Disclosure of relevant information—

(a) is “unprompted” if made at a time when the person making the disclosure has no reason to believe that WRA has discovered or is about to discover the relevant information, and

(b) otherwise, is “prompted”.

(5) “Quality”, in relation to disclosure, includes timing, nature and extent.

Penalty for failure to pay tax E+W

[F1 122 Penalty for failure to pay tax on time E+W

(1) A person is liable to a penalty if the person has failed to pay an amount of devolved tax on or before the penalty date in respect of that amount.

[F2 (2) The penalty—

(a) in respect of an amount of land transaction tax, is 5% of the amount of unpaid tax;

(b) in respect of an amount of landfill disposals tax, is 1% of the amount of unpaid tax.]

[F3 (2A) But see section 122ZA for an exception to the rule in subsection (1).]

(3) In this section and in [F4 sections 122ZA and 122A], the penalty date in respect of an amount of devolved tax specified in column 3 of Table A1 is the date specified in column 4.

TABLE A1

Item	Devolved Tax	Amount of Tax	Penalty date
1	Land transaction tax	Amount (or additional amount) payable as a result of a tax return made by the buyer in a land transaction (unless the amount falls within item 8 or 9).	The date falling 30 days after the filing date for the return.
2	Landfill disposals tax	Amount [F5 payable as a result of] a tax return.	The date falling 30 days after the filing date for the return.
3	Any devolved tax	Amount payable as a result of a WRA determination made in place of a tax return.	The date falling 30 days after the date by which WRA believes the tax return was required to be made.
4	Any devolved tax	Amount payable as a result of a WRA assessment made in place of a tax return (unless the amount falls within item 7).	The date falling 30 days after the date by which WRA believes the tax return was required to be made.
5	Any devolved tax	Amount (or additional amount) payable as a result of a WRA assessment made where a tax return has been made.	The date falling 30 days after the date by which the amount (or additional amount) is required to be paid.
6	Any devolved tax	Amount (or additional amount) payable as a result of an amendment or a correction to a tax return.	The date falling 30 days after the date by which the amount (or additional amount) is required to be paid.
7	Any devolved tax	Amount (or additional amount) payable as a result of a WRA assessment made for the purposes of making an adjustment to counteract a tax advantage (see Part 3A) in a case where a tax return which WRA has reason to believe was required to be made has not in fact been made.	The date falling 30 days after the date by which the amount (or additional amount) is required to be paid.
8	Land transaction tax	Where a deferral request is made under section 58 of LTTA, a deferred amount required to be paid by virtue of section 61(1)of that Act.	The date falling 30 days after the date by which the deferred amount is required to be paid.
9	Land transaction tax	Where a deferral request is made under section 58 of LTTA, a refused amount within the meaning of section 61(2)(a) of that Act.	The date falling 30 days after the date by which the refused amount is required to be paid.
10	Landfill disposals tax	Amount charged by a charging notice issued under section 48 or 49 of LDTA.	The date falling 30 days after the date by which the amount is required to be paid.
11	Any devolved tax	A postponed amount within the meaning of section 181G(2).	The date falling 30 days after the date on which the postponement period ends (see section 181G as to the calculation of postponement periods).

(4) In this section, “"deferred amount”” has the same meaning as in section 58(6)(a) of LTTA.

(5) The Welsh Ministers may by regulations modify Table A1.]

Textual Amendments

F1 Ss. 122, 122A substituted for s. 122 (1.4.2018) by Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 (anaw 1), s. 81(2)(3), Sch. 23 para. 42; S.I. 2018/34, art. 3

F2 S. 122(2) substituted (1.4.2018) by Landfill Disposals Tax (Wales) Act 2017 (anaw 3), ss. 75, 97(2); S.I. 2018/35, art. 3

F3 S. 122(2A) inserted (1.4.2018) by Landfill Disposals Tax (Wales) Act 2017 (anaw 3), s. 97(2), Sch. 4 para. 11(a); S.I. 2018/35, art. 3

F4 Words in s. 122(3) substituted (1.4.2018) by Landfill Disposals Tax (Wales) Act 2017 (anaw 3), s. 97(2), Sch. 4 para. 11(b); S.I. 2018/35, art. 3

F5 Words in s. 122 Table A1 substituted (1.4.2018) by The Landfill Disposals Tax (Administration) (Wales) Regulations 2018 (S.I. 2018/101), reg. 1(2), Sch. para. 24

123 Suspension of penalty for failure to pay tax during currency of agreement for deferred payment E+W

(1) This section applies if—

(a) a person by whom an amount of devolved tax is payable has made a request to WRA, on or before the penalty date, to defer payment of the amount, and

(b) WRA has agreed, on or before that date, that payment of the amount may be deferred for a period (“the deferral period”).

(2) If the person would (apart from this subsection) become liable, between the day on which the person makes the request and the end of the deferral period, to a penalty for failing to pay the amount, the person is not liable to that penalty.

(3) But if—

(a) the person breaks the agreement, and

(b) WRA issues a notice to the person specifying any penalty to which the person would be liable apart from subsection (2),

the person becomes liable to that penalty on the day on which the notice is issued.

(4) A person breaks an agreement if—

(a) the person fails to pay the amount in question when the deferral period ends, or

(b) the deferral is subject to a condition (including a condition that part of the amount be paid during the deferral period) and the person fails to comply with it.

(5) If the agreement mentioned in subsection (1) is varied at any time by a further agreement between the person and WRA, this section applies from that time to the agreement as varied.

Penalties under Chapter 2: general E+W

124 Interaction of penalties E+W

(1) Where a person is liable to more than one penalty under sections 118 to 120 which is determined by reference to a liability to a devolved tax, the aggregate of the amounts of those penalties must not exceed 100% of the liability to the devolved tax.

(2) Where a person is liable to—

(a) a penalty under this Chapter which is determined by reference to a liability to a devolved tax, and

(b) any other penalty (other than a penalty under this Chapter) which is determined by reference to the same liability to a devolved tax,

the amount of the penalty under this Chapter is to be reduced by the amount of that other penalty.

125 Special reduction in penalty under Chapter 2 E+W

(1) WRA may reduce a penalty under this Chapter if it thinks it right to do so because of special circumstances.

(2) In subsection (1), “special circumstances” does not include—

(a) ability to pay, or

(b) the fact that a potential loss of revenue from one person is balanced by a potential over-payment by another.

(3) In subsection (1), the reference to reducing a penalty includes a reference to—

(a) remitting a penalty entirely,

(b) suspending a penalty, and

(c) agreeing a compromise in relation to proceedings for a penalty.

(4) In this section a reference to a penalty include a reference to any interest in relation to a penalty.

126 Reasonable excuse for failure to make tax return or pay tax [F6 or amount payable in respect of tax credit] E+W

(1) If a person satisfies WRA or (on appeal) the tribunal that there is a reasonable excuse for a failure to make a tax return, the person is not liable to a penalty under sections 118 to 120 in relation to the failure.

(2) If a person satisfies WRA or (on appeal) the tribunal that there is a reasonable excuse for a failure to pay a devolved tax, the person is not liable to a penalty under [F7 sections 122 to 122A] in relation to the failure.

[F8 (2A) If a person satisfies WRA or (on appeal) the tribunal that there is a reasonable excuse for a failure to pay an amount payable in respect of a tax credit, the person is not liable to a penalty under section 123A in relation to the failure.]

(3) For the purposes of subsections (1) [F9 , (2) and (2A)]—

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

(b) where a 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;

(c) where a 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.

Textual Amendments

F6 Words in s. 126 heading inserted (1.4.2018) by The Landfill Disposals Tax (Administration) (Wales) Regulations 2018 (S.I. 2018/101), reg. 1(2), Sch. para. 26(4)

F7 Words in s. 126(2) substituted (1.4.2018) by Landfill Disposals Tax (Wales) Act 2017 (anaw 3), s. 97(2), Sch. 4 para. 13; S.I. 2018/35, art. 3

F8 S. 126(2A) inserted (1.4.2018) by The Landfill Disposals Tax (Administration) (Wales) Regulations 2018 (S.I. 2018/101), reg. 1(2), Sch. para. 26(2)

F9 Words in s. 126(3) substituted (1.4.2018) by The Landfill Disposals Tax (Administration) (Wales) Regulations 2018 (S.I. 2018/101), reg. 1(2), Sch. para. 26(3)

Modifications etc. (not altering text)

C1 Ss. 125-128 applied (1.4.2018) by The Tax Collection and Management (Reimbursement Arrangements) (Wales) Regulations 2018 (S.I. 2018/88), regs. 1(2), 8(3)

Commencement Information

I1 S. 126 in force at 1.4.2018 by S.I. 2018/33, art. 3

127 Assessment of penalties under Chapter 2 E+W

(1) Where a person becomes liable to a penalty under this Chapter, WRA must—

(a) assess the penalty,

(b) issue notice to the person of the penalty assessed, and

(c) state in the notice the period [F10 , transaction or amount] in respect of which the penalty has been assessed.

(2) An assessment of a penalty under this Chapter may be combined with an assessment to a devolved tax.

(3) A supplementary assessment may be made in respect of a penalty under section 119 or 120 if an earlier assessment operated by reference to an underestimate of the amount of devolved tax to which a person would have been liable if a tax return had been made.

(4) If—

(a) an assessment in respect of a penalty under section 119 or 120 is based on the amount of devolved tax to which a person would have been liable if a tax return had been made, and

(b) that liability is found by WRA to be excessive,

WRA may issue a notice to the person liable to the penalty amending the assessment so that it is based on the correct amount.

(5) A supplementary assessment may be made in respect of a penalty under section 122 [F11 , 122ZA] [F12 or 122A] if an earlier assessment operated by reference to an underestimate of the amount of devolved tax which was payable.

(6) If an assessment in respect of a penalty under section 122 [F13 , 122ZA] [F14 or 122A] is based on an amount of tax payable that is found by WRA to be excessive, WRA may issue a notice to the person liable to the penalty amending the assessment so that it is based on the correct amount.

[F15 (6A) A supplementary assessment may be made in respect of a penalty under section 123A if an earlier assessment operated by reference to an underestimate of the amount payable in respect of the tax credit in question.

(6B) If an assessment in respect of a penalty under section 123A is based on an amount that is found by WRA to be excessive, WRA may issue a notice to the person liable to the penalty amending the assessment so that it is based on the correct amount.]

(7) An amendment made under subsection (4) [F16 , (6) or (6B)] —

(a) does not affect when the penalty must be paid, and

(b) may be made after the last day on which the assessment in question could have been made under section 128.

Textual Amendments

F10 Words in s. 127(1)(c) substituted (1.4.2018) by The Landfill Disposals Tax (Administration) (Wales) Regulations 2018 (S.I. 2018/101), reg. 1(2), Sch. para. 27(2)

F11 Word in s. 127(5) inserted (1.4.2018) by Landfill Disposals Tax (Wales) Act 2017 (anaw 3), s. 97(2), Sch. 4 para. 14(a); S.I. 2018/35, art. 3

F12 Words in s. 127(5) inserted (1.4.2018) by Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 (anaw 1), s. 81(2)(3), Sch. 23 para. 46(a); S.I. 2018/34, art. 3

F13 Word in s. 127(6) inserted (1.4.2018) by Landfill Disposals Tax (Wales) Act 2017 (anaw 3), s. 97(2), Sch. 4 para. 14(b); S.I. 2018/35, art. 3

F14 Words in s. 127(6) inserted (1.4.2018) by Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 (anaw 1), s. 81(2)(3), Sch. 23 para. 46(b); S.I. 2018/34, art. 3

F15 S. 127(6A)(6B) inserted (1.4.2018) by The Landfill Disposals Tax (Administration) (Wales) Regulations 2018 (S.I. 2018/101), reg. 1(2), Sch. para. 27(3)

F16 Words in s. 127(7) substituted (1.4.2018) by The Landfill Disposals Tax (Administration) (Wales) Regulations 2018 (S.I. 2018/101), reg. 1(2), Sch. para. 27(4)

Modifications etc. (not altering text)

C1 Ss. 125-128 applied (1.4.2018) by The Tax Collection and Management (Reimbursement Arrangements) (Wales) Regulations 2018 (S.I. 2018/88), regs. 1(2), 8(3)

Commencement Information

I2 S. 127 in force at 1.4.2018 by S.I. 2018/33, art. 3

128 Time limit for assessment of penalties under Chapter 2 E+W

(1) An assessment of a penalty under this Chapter F17 ... must be made on or before the later of date A and (where it applies) date B.

(2) Date A is the last day of the period of 2 years beginning with—

(a) in the case of failure to make a tax return, the filing date, F18 ...

(b) in the case of failure to pay a devolved tax, the penalty date [F19 , or

(c) in the case of a failure to pay an amount payable in respect of a tax credit, the penalty date.]

(3) Date B is the last day of the period of 12 months beginning with—

(a) in the case of a failure to make a tax return—

(i) the end of the appeal period for the assessment of the amount of devolved tax to which a person would have been liable if the tax return had been made, or

(ii) if there is no such assessment, the date on which that liability is ascertained or it is ascertained that the liability is nil;

(b) in the case of a failure to pay a devolved tax—

(i) the end of the appeal period for the assessment of the amount of devolved tax in respect of which the penalty is assessed, or

(ii) if there is no such assessment, the date on which that amount of devolved tax is ascertained.

[F20 (c) in the case of a failure to pay an amount payable in respect of a tax credit, the end of the appeal period for the assessment of the amount in respect of which the penalty is assessed.]

(4) In subsection (2)(b), “penalty date” has the meaning given by section [F21 122(3)].

[F22 (4A) In subsection (2)(c), “penalty date” has the meaning given by section 123A(3).]

(5) In subsection (3) F23 ..., “appeal period” means F24 ...—

(a) if no appeal is made, the period during which an appeal could be made, and

(b) if an appeal is made, the period ending with its final determination or withdrawal.

Textual Amendments

F17 Words in s. 128(1) omitted (1.4.2018) by virtue of Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 (anaw 1), s. 81(2)(3), Sch. 23 para. 47(a); S.I. 2018/34, art. 3

F18 Word in s. 128(2) omitted (1.4.2018) by virtue of The Landfill Disposals Tax (Administration) (Wales) Regulations 2018 (S.I. 2018/101), reg. 1(2), Sch. para. 28(2)(a)

F19 S. 128(2)(c) and word inserted (1.4.2018) by The Landfill Disposals Tax (Administration) (Wales) Regulations 2018 (S.I. 2018/101), reg. 1(2), Sch. para. 28(2)(b)

F20 S. 128(3)(c) inserted (1.4.2018) by The Landfill Disposals Tax (Administration) (Wales) Regulations 2018 (S.I. 2018/101), reg. 1(2), Sch. para. 28(3)

F21 Word in s. 128(4) substituted (1.4.2018) by Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 (anaw 1), s. 81(2)(3), Sch. 23 para. 47(b); S.I. 2018/34, art. 3

F22 S. 128(4A) inserted (1.4.2018) by The Landfill Disposals Tax (Administration) (Wales) Regulations 2018 (S.I. 2018/101), reg. 1(2), Sch. para. 28(4)

F23 Words in s. 128(5) omitted (1.4.2018) by virtue of The Landfill Disposals Tax (Administration) (Wales) Regulations 2018 (S.I. 2018/101), reg. 1(2), Sch. para. 28(5)

F24 Words in s. 128(5) omitted (1.4.2018) by virtue of Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 (anaw 1), s. 81(2)(3), Sch. 23 para. 47(c); S.I. 2018/34, art. 3

Modifications etc. (not altering text)

C1 Ss. 125-128 applied (1.4.2018) by The Tax Collection and Management (Reimbursement Arrangements) (Wales) Regulations 2018 (S.I. 2018/88), regs. 1(2), 8(3)

Commencement Information

I3 S. 128 in force at 1.4.2018 by S.I. 2018/33, art. 3