HM Revenue and Customs (HMRC) administer almost 20 different taxes and duties and several other collection and payment regimes such as tax credits, national insurance and child benefit. All of the regimes make provision for administrative financial penalties to underpin compliance.
Financial penalties are levied to address non-compliant behaviour in the following areas:
Failure to notify taxable activity;
Late filing or non-filing of returns;
Late or non-payment of taxes, duties and national insurance contributions;
Errors on returns due to negligence, carelessness or deliberate action;
Failure to provide information or to make business premises and records available for inspection;
Regime specific contraventions such as unauthorised issue of VAT invoices or unauthorised use of a customs warehouse.
The numerous existing regime specific penalties are being replaced by a smaller number of new generic administrative financial penalties, with no penalty charged for mistakes where the taxpayer has taken reasonable care. Significant reductions will be available for those who make unprompted disclosures, with smaller reductions for prompted disclosures. Most penalties will be charged as a percentage of the tax under-declared.