Failure to notify penalty
HMRC have issued a Revenue & Customs Brief 30/10 entitled ‘New penalty for failure to notify‘. The new ‘failure to notify’ penalty will apply to taxpayers who fail to inform HMRC of changes relevant to their tax status. Effective from 1 April 2010 the penalty appliesto over twenty separate taxes including corporation tax, VAT, income tax, capital gains tax and landfill tax.
In order to avoid being subject to a ‘failure to notify’ penalty, taxpayers must ensure that they notify HMRC when their circumstances change in a relevant way, for example where there are substantial changes in turnover (necessitating a new or revised VAT registration) or a new business activity commences.
HMRC have provided the following examples of when a failure to notify penalty can be incurred:
- Businesses that exceed the VAT registration threshold and do not notify HMRC within 30 days.
- Taxpayers who have not received a self-assessment return or notice to file form and fail to inform HMRC that they need one because they have untaxed income or capital gains to declare.
- Businesses that have not received a corporation tax return or notice to file form and fail to inform HMRC that they have become chargeable to tax.
- A taxpayer who makes a taxable profit from self-employment for the first time, but fails to inform HMRC that this makes them liable to pay tax.
The penalties can range from 0% where there is a reasonable excuse to up to 100% of the tax where an error is deliberate and concealed. Taxpayers have the right to appeal the penalty imposed to a Tribunal or request an internal review by HMRC.