SCHEDULES
C4C9C10C3C7C8C12C1C6C11SCHEDULE 56Penalty for failure to make payments on time
Sch. 56 applied (with modifications) by SI 2009/470 reg. 68(3) (as substituted (with application in accordance with reg. 1(2) of the amending S.I.) by The Education (Student Loans) (Repayment) (Amendment) Regulations 2010 (S.I. 2010/661), regs. 1(1), 6)
Sch. 56 applied (with modifications) by SI 2001/1004 reg. 67B (as inserted (with application in accordance with reg. 1(3) of the amending S.I.) by The Social Security (Contributions) (Amendment No. 4) Regulations 2010 (S.I. 2010/721), regs. 1(2), 3)
Sch. 56 applied (with modifications) by SI 2001/1004 reg. 67A (as inserted (with application in accordance with reg. 1(3) of the amending S.I.) by The Social Security (Contributions) (Amendment No. 4) Regulations 2010 (S.I. 2010/721), regs. 1(2), 3)
Sch. 56 modified (8.4.2010) by Finance Act 2010 (c. 13), Sch. 1 para. 39
Sch. 56 applied by SR 2009/128, reg. 31 (as substituted (6.4.2011) by The Education (Student Loans) (Repayment) (Amendment) Regulations (Northern Ireland) 2011 (S.R. 2011/137), regs. 1(1), 6 (with reg. 12))
Sch. 56 applied by S.I. 2009/470 reg. 36 (as substituted (6.4.2011) by The Education (Student Loans) (Repayment) (Amendment) Regulations 2011 (S.I. 2011/784), regs. 1(1), 7 (with reg. 12(1)))
Sch. 56 applied (E.) (with application in accordance with reg. 1 of the amending S.I.) by The Education (Postgraduate Masters Degree Loans) Regulations 2016 (S.I. 2016/606), regs. 1(1), 85(3)
Sch. 56 applied (E.) (with application in accordance with reg. 1 of the amending S.I.) by The Education (Postgraduate Masters Degree Loans) Regulations 2016 (S.I. 2016/606), regs. 1(1), 46
Sch. 56: power to amend conferred (22.7.2020) by Finance Act 2020 (c. 14), Sch. 7 para. 5(1)(c)
Penalty for failure to pay tax
I6I92I66I3I23I118C5I741
1
A penalty is payable by a person (“P”) where P fails to pay an amount of tax specified in column 3 of the Table below on or before the date specified in column 4.
2
a
the circumstances in which a penalty is payable, and
b
subject to paragraph 9, the amount of the penalty.
3
If P's failure falls within more than one provision of this Schedule, P is liable to a penalty under each of those provisions.
4
In the following provisions of this Schedule, the “penalty date”, in relation to an amount of tax, means F69the day after the date specified in or for the purposes of column 4 of the Table in relation to that amount..
F205
Sub-paragraph (4) is subject to paragraph 2A.
Tax to which payment relates | Amount of tax payable | Date after which penalty is incurred | |
|---|---|---|---|
PRINCIPAL AMOUNTS | |||
1 | Income tax or capital gains tax | Amount payable under section 59B(3) or (4) of TMA 1970 | The date falling 30 days after the date specified in section 59B(3) or (4) of TMA 1970 as the date by which the amount must be paid |
F141A | Income tax or capital gains tax | Amount payable under section 59BA(4) or (5) of TMA 1970 | The date falling 30 days after the date specified in section 59BA(4) or (5) of TMA 1970 as the date by which the amount must be paid. |
2 | Income tax | Amount payable under PAYE regulations F3... | The date determined by or under PAYE regulations as the date by which the amount must be paid |
3 | Income tax | Amount shown in return under section 254(1) of FA 2004 | The date falling 30 days after the date specified in section 254(5) of FA 2004 as the date by which the amount must be paid |
F43A | Income tax | Amount payable under regulations under section 244L(2)(a) of FA 2004 | The date falling 30 days after the due date determined by or under the regulations |
F53B | Capital gains tax | Amount payable under paragraph 6 of Schedule 2 to FA 2019 where not included in a return under section 8 or 8A of TMA 1970 | The date falling 30 days after 31 January in the tax year following the one in which the disposal was made |
F253C | Capital gains tax | Amount payable under a CGT exit charge payment plan entered into in accordance with Schedule 3ZAA to TMA 1970 | The later of—
|
4 | Deductions on account of tax under Chapter 3 of Part 3 of FA 2004 (construction industry scheme) | Amount payable under section 62 of FA 2004 (except an amount falling within item 17, 23 or 24) | The date determined by or under regulations under F11section 71 of FA 2004 as the date by which the amount must be paid |
F104A | Apprenticeship levy | Amount payable under regulations under section 105 of FA 2016 | The date determined by or under regulations under section 105 of FA 2016 |
5 | Corporation tax | Amount shown in company tax return under paragraph 3 of Schedule 18 to FA 1998 | The filing date for the company tax return for the accounting period for which the tax is due (see paragraph 14 of Schedule 18 to FA 1998) |
6 | Corporation tax | Amount payable under regulations under section 59E of TMA 1970 (except an amount falling within item 17, 23 or 24) | The filing date for the company tax return for the accounting period for which the tax is due (see paragraph 14 of Schedule 18 to FA 1998) |
F276ZZA | Corporation tax | Amount payable under section 357YQ of CTA 2010 | The end of the period within which, in accordance with section 357YQ(5), the amount must be paid. |
F436ZA | Corporation tax | Amount payable under an exit charge payment plan entered into in accordance with Schedule 3ZB to TMA 1970 | The later of—
|
F416ZAA | Corporation tax | Amount payable under a CT payment plan entered into in accordance with Schedule 3ZC to TMA 1970 | The later of—
|
F16ZB | Diverted profits tax | Amount of diverted profits tax payable under Part 3 of FA 2015 | The date when, in accordance with section 98(2) of FA 2015, the amount must be paid |
F396A | Value added tax | Amount payable under section 25(1) of VATA 1994 (except an amount falling within item 6B, 13A, 23 or 24) | The date determined—
as the date by which the amount must be paid |
6B | Value added tax | Amount payable under section 25(1) of VATA 1994 which is an instalment of an amount due in respect of a period of 9 months or more (“amount A”) | The date on or before which P must pay any balancing payment or other outstanding payment due in respect of amount A |
6C | Insurance premium tax | Amount payable under regulations under section 54 of FA 1994 (except an amount falling within item 13B, 23 or 24) | The date determined by or under regulations under section 54 of FA 1994 as the date by which the amount must be paid |
7 | Inheritance tax | Amount payable under section 226 of IHTA 1984 (except an amount falling within item 14 or 21) | The filing date (determined under section 216 of IHTA 1984) for the account in respect of the liability for that amount |
8 | Inheritance tax | Amount payable under section 227 or 229 of IHTA 1984 (except an amount falling within item 14 or 21) | For the first instalment, the filing date (determined under section 216 of IHTA 1984) for the account in respect of the liability for that amountFor any later instalment, the date falling 30 days after the date determined under section 227 or 229 of IHTA 1984 as the date by which the instalment must be paid |
9 | Stamp duty land tax | Amount payable under section 86(1) or (2) of FA 2003 | The date falling 30 days after the date specified in section 86(1) or (2) of FA 2003 as the date by which the amount must be paid |
10 | Stamp duty reserve tax | Amount payable under section 87, 93 or 96 of FA 1986 or Schedule 19 to FA 1999 (except an amount falling within item 17, 23 or 24) | The date falling 30 days after the date determined by or under regulations under section 98 of FA 1986 as the date by which the amount must be paid |
F3110A | Annual tax on enveloped dwellings | Amount payable under section 163(1) or (2) of FA 2013 (except an amount falling within item 23). | The date falling 30 days after the date specified in section 163(1) or (2) of FA 2013 as the date by which the amount must be paid |
11 | Petroleum revenue tax | Amount charged in an assessment under paragraph 11(1) of Schedule 2 to OTA 1975 | The date falling 30 days after the date determined in accordance with paragraph 13 of Schedule 2 to OTA 1975 as the date by which the amount must be paid |
F2111ZA | Soft drinks industry levy | Amount payable under regulations under section 52 of FA 2017 or paragraphs 6 or 14 of Schedule 8 to that Act | The date determined by or under regulations under section 52 of FA 2017 |
F7011A | Aggregates levy | Amount payable under regulations under section 25 of FA 2001 (except an amount falling within item 16A, 23 or 24) | The date determined by or under regulations under section 25 of FA 2001 as the date by which the amount must be paid |
F7111AA | Plastic packaging tax | Amount payable under regulations under section 61 of FA 2021 | The date determined by or under regulations under section 61 of FA 2021 as the date by which the amount must be paid |
11AB | Plastic packaging tax | Amount payable by virtue of secondary liability and assessment notice or joint and several liability notice under Schedule 9 to FA 2021 | The date determined in accordance with Schedule 9 to FA 2021 as the date by which the amount must be paid |
11B | Climate change levy | Amount payable under regulations under paragraph 41 of Schedule 6 to FA 2000 (except an amount falling within item 16B, 23 or 24) | The date determined by or under regulations under paragraph 41 of Schedule 6 to FA 2000 as the date by which the amount must be paid |
11C | Landfill tax | Amount payable under regulations under section 49 of FA 1996 (except an amount falling within item 16C, 23 or 24) | The date determined by or under regulations under section 49 of FA 1996 as the date by which the amount must be paid |
11D | Air passenger duty | Amount payable under regulations under section 38 of FA 1994 (except an amount falling within item 17A, 23 or 24) | The date determined by or under regulations under section 38 of FA 1994 as the date by which the amount must be paid |
11E | Alcoholic liquor duties | Amount payable under regulations under section 13, 49, 56 or 62 of ALDA 1979 (except an amount falling within item 17A, 23 or 24) | The date determined by or under regulations under section 13, 49, 56 or 62 of ALDA 1979 as the date by which the amount must be paid |
11F | Tobacco products duty | Amount payable under regulations under section 7 of TPDA 1979 (except an amount falling within item 17A, 23 or 24) | The date determined by or under regulations under section 7 of TPDA 1979 as the date by which the amount must be paid |
11G | Hydrocarbon oil duties | Amount payable under regulations under section 21 or 24 of HODA 1979 (except an amount falling within item 17A, 23 or 24) | The date determined by or under regulations under section 21 or 24 of HODA 1979 as the date by which the amount must be paid |
F2911GA | Excise duties | Amount payable under regulations under section 60A of the Customs and Excise Management Act 1979 (except an amount falling within item 17A, 23 or 24). | The date determined by or under regulations under section 60A of the Customs and Excise Management Act 1979 as the date by which the amount must be paid |
11H | General betting duty | Amount payable under section 5B of BGDA 1981 (except an amount falling within item 17A, 23 or 24) | The date determined—
as the date by which the amount must be paid |
11I | Pool betting duty | Amount payable under section 8 of BGDA 1981 (except an amount falling within item 17A, 23 or 24) | The date determined—
as the date by which the amount must be paid |
11J | Bingo duty | Amount payable under regulations under paragraph 9 of Schedule 3 to BGDA 1981 (except an amount falling within item 17A, 23 or 24) | The date determined by or under regulations under paragraph 9 of Schedule 3 to BGDA 1981 as the date by which the amount must be paid |
11K | Lottery duty | Amount payable under section 26 of FA 1993 (except an amount falling within item 17A, 23 or 24) | The date determined—
as the date by which the amount must be paid |
11L | Gaming duty | Amount payable under section 12 of FA 1997 (except an amount falling within item 17A, 23 or 24) | The date determined by or under regulations under—
as the date by which the amount must be paid |
11M | Remote gaming duty | Amount payable under section 26I of BGDA 1981 (except an amount falling within item 17A, 23 or 24) | The date determined by or under regulations under section 26I of BGDA 1981 as the date by which the amount must be paid |
F6111N | Machine games duty | Amount payable under paragraph 6 of Schedule 24 to FA 2012 (except an amount falling within item 17A, 23 or 24) | The date determined by or under regulations under paragraph 19 of Schedule 24 to FA 2012 as the date by which the amount must be paid |
AMOUNTS PAYABLE IN DEFAULT OF A RETURN BEING MADE | |||
12 | Income tax or capital gains tax | Amount payable under section 59B(5A) of TMA 1970 | The date falling 30 days after the date specified in section 59B(5A) of TMA 1970 as the date by which the amount must be paid |
13 | Corporation tax | Amount shown in determination under paragraph 36 or 37 of Schedule 18 to FA 1998 | The filing date for the company tax return for the accounting period for which the tax is due (see paragraph 14 of Schedule 18 to FA 1998) |
F5413A | Value added tax | Amount assessed under section 73(1) of VATA 1994 in the absence of a return | The date by which the amount would have been required to be paid if it had been shown in the return |
13B | Insurance premium tax | Amount assessed under section 56(1) of FA 1994 in the absence of a return | The date by which the amount would have been required to be paid if it had been shown in the return |
14 | Inheritance tax | Amount shown in a determination made by HMRC in the circumstances set out in paragraph 2 | The filing date (determined under section 216 of IHTA 1984) for the account in respect of the liability for that amount |
15 | Stamp duty land tax | Amount shown in determination under paragraph 25 of Schedule 10 to FA 2003 (including that paragraph as applied by section 81(3) of that Act) | The date falling 30 days after the filing date for the return in question |
F615A | Annual tax on enveloped dwellings | Amount shown in determination under paragraph 18 of Schedule 33 to FA 2013 | The date falling 30 days after the filing date for the return in question |
16 | Petroleum revenue tax | Amount charged in an assessment made where participator fails to deliver return for a chargeable period | The date falling 6 months and 30 days after the end of the chargeable period |
F5716A | Aggregates levy | Amount assessed under paragraph 2 or 3 of Schedule 5 to FA 2001 in the absence of a return | The date by which the amount would have been required to be paid if it had been shown in the return |
F4716AA | Plastic packaging tax | Amount assessed under Schedule 10 to FA 2021 | The date by which the amount would have been required to be paid if it had been shown in the return |
16B | Climate change levy | Amount assessed under paragraph 78 or 79 of Schedule 6 to FA 2000 in the absence of a return | The date by which the amount would have been required to be paid if it had been shown in the return |
16C | Landfill tax | Amount assessed under section 50(1) of FA 1996 in the absence of a return | The date by which the amount would have been required to be paid if it had been shown in the return |
17 | Tax falling within any of items 1 to 6, 9 or 10 | Amount (not falling within any of items 12 to 15) which is shown in an assessment or determination made by HMRC in the circumstances set out in paragraph 2 | The date falling 30 days after the date by which the amount would have been required to be paid if it had been shown in the return in question |
F5117A | Amount assessed under section 12(1) of FA 1994 in the absence of a return | The date by which the amount would have been required to be paid if it had been shown in the return | |
AMOUNTS SHOWN TO BE DUE IN OTHER ASSESSMENTS, DETERMINATIONS, ETC | |||
18 | Income tax or capital gains tax | Amount payable under section 55 of TMA 1970 | The date falling 30 days after the date determined in accordance with section 55(3), (4), (6) or (9) of TMA 1970 as the date by which the amount must be paid |
19 | Income tax or capital gains tax | Amount payable under section 59B(5) or (6) of TMA 1970 | The date falling 30 days after the date specified in section 59B(5) or (6) of TMA 1970 as the date by which the amount must be paid |
20 | F8. . . | F8. . . | F8. . . |
21 | Inheritance tax | Amount shown in—
| The later of—
|
22 | Petroleum revenue tax | Amount charged in an assessment, or an amendment of an assessment, made in circumstances other than those set out in items 11 and 16 | The date falling 30 days after—
whichever is later |
23 | Tax falling within any of | Amount (not falling within | The date falling 30 days after—
whichever is later |
24 | Tax falling within any of | Amount (not falling within | The date falling 30 days after—
whichever is later |
Assessments and determinations in default of return
I40I78I84I72I111I1162
The circumstances referred to in items 14, 17, 21 and 24 are where—
a
P or another person is required to make or deliver a return falling within any item in the Table in Schedule 55,
b
that person fails to make or deliver the return on or before the date by which it is required to be made or delivered, and
F22Different penalty date for certain PAYE payments
Sch. 56 para. 2A and cross-heading inserted (25.1.2011) by Finance (No. 3) Act 2010 (c. 33), s. 27(2), Sch. 11 para. 4; S.I. 2011/132, art. 2(b)
I124I120I122I682A
1
PAYE regulations may provide that, in relation to specified payments of tax falling within item 2, the penalty date is a specified date later than that determined in accordance with column 4 of the Table.
2
In sub-paragraph (1) “specified” means specified in the regulations.
Amount of penalty: occasional amounts and amounts in respect of periods of 6 months or more
I105I13I79I38I57I25I273
1
This paragraph applies in the case of—
a
F33aa
a payment of tax falling within item 6ZB in the Table,
b
c
a payment of tax falling within item 2 which is payable under regulations under section 688A of ITEPA 2003 (recovery from other persons of amounts due from managed service companies).
F32ca
an amount in respect of apprenticeship levy falling within item 4A which is payable by virtue of regulations under section 106 of FA 2016 (recovery from third parties);
F63d
a payment of tax falling within item 6A which relates to a transitional period for the purposes of the annual accounting scheme;
F361A
In sub-paragraph (1)(d), a transitional period for the purposes of the annual accounting scheme is a prescribed accounting period (within the meaning of section 25(1) of VATA 1994) which—
a
ends on the day immediately preceding the date indicated by the Commissioners for Her Majesty's Revenue and Customs in a notification of authorisation under regulation 50 of the Value Added Tax Regulations 1995 (S.I. 1995/2518) (admission to annual accounting scheme), or
b
begins on the day immediately following the end of the last period of 12 months for which such an authorisation has effect.
2
P is liable to a penalty of 5% of the unpaid tax.
3
If any amount of the tax is unpaid after the end of the period of 5 months beginning with the penalty date, P is liable to a penalty of 5% of that amount.
4
If any amount of the tax is unpaid after the end of the period of 11 months beginning with the penalty date, P is liable to a penalty of 5% of that amount.
I32I24I110I100I41I99I14
1
2
P is liable to a penalty of 5% of the unpaid tax.
3
If any amount of the tax is unpaid after the end of the period of 3 months beginning with the penalty date, P is liable to a penalty of 5% of that amount.
4
If any amount of the tax is unpaid after the end of the period of 9 months beginning with the penalty date, P is liable to a penalty of 5% of that amount.
Amount of penalty: PAYE and CIS amounts F19etc.
Word in Sch. 56 para. 5 cross-heading inserted (15.9.2016) by Finance Act 2016 (c. 24), s. 113(15) (with s. 117)
I18I33I115I4I48I8I715
1
Paragraphs 6 to 8 apply in the case of a payment of tax falling within item 2F13, 4 or 4A in the Table.
2
But those paragraphs do not apply in the case of a payment mentioned in paragraph 3(1)(b)F24, (c) or (ca).
I91I46I77I95I64I35F306
F341
P is liable to a penalty under this paragraph, in relation to each tax, each time that P makes a default in relation to a tax year.
2
For the purposes of this paragraph, P makes a default F58in relation to a tax year when P fails to make one of the following payments (or to pay an amount comprising two or more of those payments) in full on or before the date on which it becomes due and payable—
a
a payment under PAYE regulations F12of tax payable in relation to the tax year;
b
a payment of earnings-related contributions within the meaning of the Social Security (Contributions) Regulations 2001 ( S.I. 2001/1004) F60payable in relation to the tax year;
F7ba
a payment under regulations under section 105 of FA 2016 of an amount in respect of apprenticeship levy payable in relation to the tax year;
c
a payment due under the Income Tax (Construction Industry Scheme) Regulations 2005 ( S.I. 2005/2045) F55payable in relation to the tax year ;
d
a repayment in respect of a student loan due under the Education (Student Loans) (Repayments) Regulations 2009 ( S.I. 2009/470) or the Education (Student Loans) (Repayments) Regulations (Northern Ireland) 2000 (S.R. 2000 No. 121) F50and due for the tax year .
F233
But where a failure to make one of those payments (or to pay an amount comprising two or more of those payments) would, apart from this sub-paragraph, constitute the first default in relation to a tax year, that failure does not count as a default in relation to that year for the purposes of a penalty under this paragraph.
4
The amount of the penalty for a default made in relation to a tax year is determined by reference to—
a
the amount of the tax comprised in the default, and
b
the number of previous defaults that P has made in relation to the same tax year.
5
If the default is P's 1st, 2nd or 3rd default in relation to the tax year, P is liable, at the time of the default, to a penalty of 1% of the amount of tax comprised in the default.
6
If the default is P's 4th, 5th or 6th default in relation to the tax year, P is liable, at the time of the default, to a penalty of 2% of the amount of tax comprised in the default.
7
If the default is P's 7th, 8th or 9th default in relation to the tax year, P is liable, at the time of the default, to a penalty of 3% of the amount of tax comprised in the default.
7A
If the default is P's 10th or subsequent default in relation to the tax year, P is liable, at the time of the default, to a penalty of 4% of the amount of tax comprised in the default.
8
For the purposes of this paragraph—
a
the amount of a tax comprised in a default is the amount of that tax comprised in the payment which P fails to make;
F35b
a previous default counts for the purposes of sub-paragraphs (5) to (7A) even if it is remedied before the time of the default giving rise to the penalty.
F268A
Regulations made by the Commissioners for Her Majesty's Revenue and Customs may specify—
a
circumstances in which, for the purposes of sub-paragraph (2), a payment of less than the full amount may be treated as a payment in full;
b
circumstances in which sub-paragraph (3) is not to apply.
8B
Regulations under sub-paragraph (8A) may—
a
make different provision for different cases, and
b
include incidental, consequential and supplementary provision.
9
The Treasury may by order made by statutory instrument make such amendments to sub-paragraph (2) as they think fit in consequence of any amendment, revocation or re-enactment of the regulations mentioned in that sub-paragraph.
I34I36I21I12I42I477
If any amount of the tax is unpaid after the end of the period of 6 months beginning with the penalty date, P is liable to a penalty of 5% of that amount.
I113I2I69I56I83I148
If any amount of the tax is unpaid after the end of the period of 12 months beginning with the penalty date, P is liable to a penalty of 5% of that amount.
F42Amount of penalty: amounts in respect of periods of between 2 and 6 months
Sch. 56 paras. 8A-8J and cross-headings inserted (1.4.2022 for the purposes of plastic packaging tax) by Finance (No. 3) Act 2010 (c. 33), s. 27(2), Sch. 11 para. 7 (as amended by 2014 c. 26, Sch. 22 para. 22(6), which amending provision was repealed by 2018 c. 22, s. 57(3), Sch. 8 para. 132(l) (with savings and transitional provisions in S.I. 2019/105 (as amended by S.I. 2020/1495, regs. 1(2), 21), S.I. 2020/1545, Pt. 4 and 2020 c. 26, Sch. 2 para. 7(7)-(9)); S.I. 2020/1642, reg. 4(b) (with reg. 7)); 2021 c. 26, Sch. 15 para. 5(2); 2021 c. 26, Sch. 15 para. 5(2)
8A
1
2
But those paragraphs do not apply in the case of a payment mentioned in paragraph 3(1)(d).
3
8B
1
A penalty period begins to run on the penalty date for the payment of tax.
2
The penalty period ends with the day 12 months after the date specified in or for the purposes of column 4 for the payment, unless it is extended under paragraph 8C(2)(c) or 8H(2)(c).
8C
1
This paragraph applies if—
a
a penalty period has begun under paragraph 8B or 8G because P has failed to make a payment (“payment A”), and
b
before the end of the period, P fails to make another payment (“payment B”) falling within the same item in the Table as payment A.
2
In such a case—
a
paragraph 8B(1) does not apply to the failure to make payment B,
b
P is liable to a penalty under this paragraph for that failure, and
c
the penalty period that has begun is extended so that it ends with the day 12 months after the date specified in or for the purposes of column 4 for payment B.
3
The amount of the penalty under this paragraph is determined by reference to the number of defaults that P has made during the penalty period.
4
If the default is P’s first default during the penalty period, P is liable, at the time of the default, to a penalty of 2% of the amount of the default.
5
If the default is P’s second default during the penalty period, P is liable, at the time of the default, to a penalty of 3% of the amount of the default.
6
If the default is P’s third or a subsequent default during the penalty period, P is liable, at the time of the default, to a penalty of 4% of the amount of the default.
7
For the purposes of this paragraph—
a
P makes a default when P fails to pay an amount of tax in full on or before the date on which it becomes due and payable;
b
in accordance with sub-paragraph (1)(b), the references in sub-paragraphs (3) to (6) to a default are references to a default in relation to the tax to which payments A and B relate;
c
a default counts for the purposes of those sub-paragraphs if (but only if) the period to which the payment relates is less than 6 months;
d
the amount of a default is the amount which P fails to pay.
8
A penalty period may be extended more than once under sub-paragraph (2)(c).
8D
If any amount of the tax is unpaid after the end of the period of 6 months beginning with the penalty date, P is liable to a penalty of 5% of that amount.
8E
If any amount of the tax is unpaid after the end of the period of 12 months beginning with the penalty date, P is liable to a penalty of 5% of that amount.
Amount of penalty: amounts in respect of periods of 2 months or less
8F
1
2
But those paragraphs do not apply in the case of a payment mentioned in paragraph 3(1)(d).
8G
1
A penalty period begins to run on the penalty date for the payment of tax.
2
The penalty period ends with the day 12 months after the date specified in or for the purposes of column 4 for the payment, unless it is extended under paragraph 8C(2)(c) or 8H(2)(c).
8H
1
This paragraph applies if—
a
a penalty period has begun under paragraph 8B or 8G because P has failed to make a payment (“payment A”), and
b
before the end of the period, P fails to make another payment (“payment B”) falling within the same item in the Table as payment A.
2
In such a case—
a
paragraph 8G(1) does not apply to the failure to make payment B,
b
P is liable to a penalty under this paragraph for that failure, and
c
the penalty period that has begun is extended so that it ends with the day 12 months after the date specified in or for the purposes of column 4 for payment B.
3
The amount of the penalty under this paragraph is determined by reference to the number of defaults that P has made during the penalty period.
4
If the default is P’s first, second or third default during the penalty period, P is liable, at the time of the default, to a penalty of 1% of the amount of the default.
5
If the default is P’s fourth, fifth or sixth default during the penalty period, P is liable, at the time of the default, to a penalty of 2% of the amount of the default.
6
If the default is P’s seventh, eighth or ninth default during the penalty period, P is liable, at the time of the default, to a penalty of 3% of the amount of the default.
7
If the default is P’s tenth or a subsequent default during the penalty period, P is liable, at the time of the default, to a penalty of 4% of the amount of the default.
8
For the purposes of this paragraph—
a
P makes a default when P fails to pay an amount of tax in full on or before the date on which it becomes due and payable;
b
in accordance with sub-paragraph (1)(b), the references in sub-paragraphs (3) to (7) to a default are references to a default in relation to the tax to which payments A and B relate;
c
a default counts for the purposes of those sub-paragraphs if (but only if) the period to which the payment relates is less than 6 months;
d
the amount of a default is the amount which P fails to pay.
9
A penalty period may be extended more than once under sub-paragraph (2)(c).
8I
If any amount of the tax is unpaid after the end of the period of 6 months beginning with the penalty date, P is liable to a penalty of 5% of that amount.
8J
If any amount of the tax is unpaid after the end of the period of 12 months beginning with the penalty date, P is liable to a penalty of 5% of that amount.
F62Calculation of unpaid VAT: treatment of payments on account
Sch. 56 para. 8K and cross-heading inserted (1.4.2022 for the purposes of plastic packaging tax) by Finance (No. 3) Act 2010 (c. 33), s. 27(2), Sch. 11 para. 8; 2021 c. 26, Sch. 15 para. 5(2)
8K
1
Where P is required, by virtue of an order under section 28 of VATA 1994, to make any payment on account of VAT—
a
each payment is to be treated for the purposes of this Schedule as relating to the prescribed accounting period in respect of which it is to be paid (and not as relating to the interval between the dates on which payments on account are required to be made), and
b
the amount of tax unpaid in respect of the prescribed accounting period is the total of the amounts produced by paragraphs (a) and (b) of sub-paragraph (3).
2
In determining that total—
a
if there is more than one amount of POAD or POAT, those amounts are to be added together, and
b
if the amount produced by sub-paragraph (3)(b) is less than zero, that amount is to be disregarded.
3
The amounts are—
a
, and
b
.
4
In this paragraph—
POAD is the amount of any payment on account due in respect of the prescribed accounting period,
POAT is the amount of any payment on account paid on time (that is, on or before the date on which it was required to be made),
BPD (which is the balancing payment due in respect of the prescribed accounting period) is equal to , and
BPT (which is the amount paid on time in satisfaction of any liability to pay BPD) is equal to .
5
In sub-paragraph (4)—
PAPD is the amount of VAT due in respect of the prescribed accounting period,
PAPP is the total amount paid, on or before the last day on which P is required to make payments in respect of that period, in satisfaction of any liability to pay PAPD, and
POAP is the total amount paid, on or before that day (but whether or not paid on time), in satisfaction of any liability to pay POAD.
Special reduction
I11I22C2I89I63I103I159
1
If HMRC think it right because of special circumstances, they may reduce a penalty under any paragraph of this Schedule.
2
In sub-paragraph (1) “special circumstances” does not include—
a
ability to pay, or
b
the fact that a potential loss of revenue from one taxpayer is balanced by a potential over-payment by another.
3
In sub-paragraph (1) the reference to reducing a penalty includes a reference to—
a
staying a penalty, and
b
agreeing a compromise in relation to proceedings for a penalty.
F52Interaction with other penalties and late payment surcharges
Sch. 56 para. 9A and cross-heading inserted (with effect in accordance with Sch. 50 para. 16(3) of the amending Act) by Finance Act 2013 (c. 29), Sch. 50 para. 13
I119C2I121I123I809A
In the application of the following provisions, no account shall be taken of a penalty under this Schedule—
a
section 97A of TMA 1970 (multiple penalties),
b
paragraph 12(2) of Schedule 24 to FA 2007 (interaction with other penalties), and
c
paragraph 15(1) of Schedule 41 to FA 2008 (interaction with other penalties).
Suspension of penalty during currency of agreement for deferred payment
I94I53C2I65I112I81I82I9710
1
This paragraph applies if—
a
P fails to pay an amount of tax when it becomes due and payable,
b
P makes a request to HMRC that payment of the amount of tax be deferred, and
c
HMRC agrees that payment of that amount may be deferred for a period (“the deferral period”).
2
If P would (apart from this sub-paragraph) become liable, between the date on which P makes the request and the end of the deferral period, to a penalty under any paragraph of this Schedule for failing to pay that amount, P is not liable to that penalty.
3
But if—
a
P breaks the agreement (see sub-paragraph (4)), and
b
HMRC serves on P a notice specifying any penalty to which P would become liable apart from sub-paragraph (2),
P becomes liable, at the date of the notice, to that penalty.
4
P breaks an agreement if—
a
P fails to pay the amount of tax in question when the deferral period ends, or
b
the deferral is subject to P complying with a condition (including a condition that part of the amount be paid during the deferral period) and P fails to comply with it.
5
If the agreement mentioned in sub-paragraph (1)(c) is varied at any time by a further agreement between P and HMRC, this paragraph applies from that time to the agreement as varied.
Assessment
I86I70C2I108I30I31I102I10711
C131
Where P is liable for a penalty under any paragraph of this Schedule HMRC must—
a
assess the penalty,
b
notify P, and
c
state in the notice the period in respect of which the penalty is assessed.
2
A penalty under any paragraph of this Schedule must be paid before the end of the period of 30 days beginning with the day on which notice of the assessment of the penalty is issued.
3
An assessment of a penalty under any paragraph of this Schedule—
a
is to be treated for procedural purposes in the same way as an assessment to tax (except in respect of a matter expressly provided for by this Schedule),
b
may be enforced as if it were an assessment to tax, and
c
may be combined with an assessment to tax.
4
A supplementary assessment may be made in respect of a penalty if an earlier assessment operated by reference to an underestimate of an amount of F2tax which was due or payable.
F164A
If an assessment in respect of a penalty is based on an amount of tax due or payable that is found by HMRC to be excessive, HMRC may by notice to P amend the assessment so that it is based upon the correct amount.
4B
An amendment made under sub-paragraph (4A)—
a
does not affect when the penalty must be paid;
b
may be made after the last day on which the assessment in question could have been made under paragraph 12.
F675
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
I76I5C2I109I16I59I11412
1
An assessment of a penalty under any paragraph of this Schedule in respect of any amount 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 the date specified in or for the purposes of column 4 of the Table (that is to say, the last date on which payment may be made without incurring a penalty).
3
Date B is the last day of the period of 12 months beginning with—
a
the end of the appeal period for the assessment of the amount of tax in respect of which the penalty is assessed, or
b
if there is no such assessment, the date on which that amount of tax is ascertained.
4
In sub-paragraph (3)(a) “appeal period” means the period during which—
a
an appeal could be brought, or
b
an appeal that has been brought has not been determined or withdrawn.
Appeal
I117I101C2I98I51I55I7313
1
P may appeal against a decision of HMRC that a penalty is payable by P.
2
P may appeal against a decision of HMRC as to the amount of a penalty payable by P.
I75I49C2I10I44I7I28I10614
1
An appeal under paragraph 13 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 review of the decision or about determination of the appeal by the First-tier Tribunal or Upper Tribunal).
2
Sub-paragraph (1) does not apply—
a
so as to require P 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 Act.
I58I88C2I93I39I50I37I2915
1
On an appeal under paragraph 13(1) that is notified to the tribunal, the tribunal may affirm or cancel HMRC's decision.
2
On an appeal under paragraph 13(2) that is notified to the tribunal, the tribunal may—
a
affirm HMRC's decision, or
b
substitute for HMRC's decision another decision that HMRC had power to make.
3
If the tribunal substitutes its decision for HMRC's, the tribunal may rely on paragraph 9—
a
to the same extent as HMRC (which may mean applying the same percentage reduction as HMRC to a different starting point), or
b
to a different extent, but only if the tribunal thinks that HMRC's decision in respect of the application of paragraph 9 was flawed.
4
In sub-paragraph (3)(b) “flawed” means flawed when considered in the light of the principles applicable in proceedings for judicial review.
5
In this paragraph “tribunal” means the First-tier Tribunal or Upper Tribunal (as appropriate by virtue of paragraph 14(1)).
Reasonable excuse
I90I52C2I19I96I9I6116
F181
If P satisfies HMRC or (on appeal) the First-tier Tribunal or Upper Tribunal that there is a reasonable excuse for a failure to make a payment—
a
liability to a penalty under any paragraph of this Schedule does not arise in relation to that failure, and
b
the failure does not count as a default for the purposes of paragraphs 6, 8B, 8C, 8G and 8H.
2
For the purposes of sub-paragraph (1)—
a
an insufficiency of funds is not a reasonable excuse unless attributable to events outside P's control,
b
where P relies on any other person to do anything, that is not a reasonable excuse unless P took reasonable care to avoid the failure, and
c
where P had a reasonable excuse for the failure but the excuse has ceased, P is to be treated as having continued to have the excuse if the failure is remedied without unreasonable delay after the excuse ceased.
Double jeopardy
I87I104C2I45I54I85I2017
P is not liable to a penalty under any paragraph of this Schedule in respect of a failure or action in respect of which P has been convicted of an offence.
Interpretation
I60I67C2I62I43I26I1718
1
This paragraph applies for the construction of this Schedule.
2
“HMRC” means Her Majesty's Revenue and Customs.
3
References to tax include construction industry deductions under Chapter 3 of Part 3 of FA 2004.
4
References to a determination, in relation to an amount payable under PAYE regulations or under Chapter 3 of Part 3 of FA 2004, include a certificate.
5
References to an assessment to tax, in relation to inheritance tax and stamp duty reserve tax, are to a determination.
Sch. 56 applied (with modifications) by SR 2009/128, reg 63(3) (as substituted (with effect in accordance with reg. 2 of the amending Rule) by The Education (Student Loans) (Repayment) (Amendment) Regulations (Northern Ireland) 2010 (S.R. 2010/91), regs. 1, 7(1))