Finance Act 2021

PART 3 U.K. Supplementary provision

Reasonable excuse U.K.

12 (1) Liability to a penalty under this Schedule does not arise in respect of a failure to make a payment 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 20(1)).

Commencement Information

I1 Sch. 26 para. 12 in force at 1.1.2023 for specified purposes by S.I. 2022/1278, reg. 2(2)

I2 Sch. 26 para. 12 in force at 6.4.2024 for specified purposes by S.I. 2024/440, reg. 2(2)

Special reduction U.K.

13 (1) If HMRC think it right because of special circumstances, they may reduce a penalty under this Schedule. U.K.

(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 a taxpayer is balanced by a potential over-payment by a taxpayer.

(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.

Commencement Information

I3 Sch. 26 para. 13 in force at 1.1.2023 for specified purposes by S.I. 2022/1278, reg. 2(2)

I4 Sch. 26 para. 13 in force at 6.4.2024 for specified purposes by S.I. 2024/440, reg. 2(2)

Double jeopardy U.K.

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

Commencement Information

I5 Sch. 26 para. 14 in force at 1.1.2023 for specified purposes by S.I. 2022/1278, reg. 2(2)

I6 Sch. 26 para. 14 in force at 6.4.2024 for specified purposes by S.I. 2024/440, reg. 2(2)

Interaction with other penalties U.K.

15 U.K. In the application of the following provisions, no account is to 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).

Commencement Information

I7 Sch. 26 para. 15 in force at 1.1.2023 for specified purposes by S.I. 2022/1278, reg. 2(2)

I8 Sch. 26 para. 15 in force at 6.4.2024 for specified purposes by S.I. 2024/440, reg. 2(2)

Assessments U.K.

16 (1) Where a person is liable to a penalty under this Schedule HMRC may assess the penalty. U.K.

(2) HMRC may by regulations make provision for HMRC to assess a penalty under paragraph 8 at times or intervals before the end of the further penalty period.

(3) Where HMRC assess a penalty they must notify the person and state in the notice—

(a) the failure to pay the tax due, for which the person is liable to the penalty,

(b) the amount of the penalty, and

(c) how that amount has been calculated (including the period to which the penalty relates).

(4) A penalty under this Schedule must be paid before the end of the period of 30 days beginning with the day on which notification of the penalty is issued.

(5) An assessment of a penalty under 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 in this Schedule),

(b) may be enforced as if it were an assessment to tax, and

(c) may be combined with an assessment to tax.

Commencement Information

I9 Sch. 26 para. 16 in force at 1.1.2023 for specified purposes by S.I. 2022/1278, reg. 2(2)

I10 Sch. 26 para. 16 in force at 6.4.2024 for specified purposes by S.I. 2024/440, reg. 2(2)

17 (1) A supplementary assessment may be made in respect of a penalty if an earlier assessment is based on an amount of tax due and payable that is found by HMRC to be an underestimate or insufficient. U.K.

(2) 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 amend the assessment so that it is based upon the correct amount.

(3) An amendment under sub-paragraph (2)—

(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 18.

Commencement Information

I11 Sch. 26 para. 17 in force at 1.1.2023 for specified purposes by S.I. 2022/1278, reg. 2(2)

I12 Sch. 26 para. 17 in force at 6.4.2024 for specified purposes by S.I. 2024/440, reg. 2(2)

Time limit for assessments U.K.

18 (1) An assessment of a penalty under this Schedule in respect of any amount must be made on or before the later of date A and (where it applies) date B. U.K.

(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 3 of the relevant table in paragraph 1 (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 (ignoring any possibility of an appeal out of time), or

(b) an appeal that has been brought has not been determined or withdrawn.

Commencement Information

I13 Sch. 26 para. 18 in force at 1.1.2023 for specified purposes by S.I. 2022/1278, reg. 2(2)

I14 Sch. 26 para. 18 in force at 6.4.2024 for specified purposes by S.I. 2024/440, reg. 2(2)

Appeals U.K.

19 (1) A person may appeal against a decision of HMRC that the person is liable to a penalty under this Schedule. U.K.

(2) A person liable to a penalty under this Schedule may appeal against a decision of HMRC as to the amount of the penalty.

Commencement Information

I15 Sch. 26 para. 19 in force at 1.1.2023 for specified purposes by S.I. 2022/1278, reg. 2(2)

I16 Sch. 26 para. 19 in force at 6.4.2024 for specified purposes by S.I. 2024/440, reg. 2(2)

20 (1) An appeal under paragraph 19 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

I17 Sch. 26 para. 20 in force at 1.1.2023 for specified purposes by S.I. 2022/1278, reg. 2(2)

I18 Sch. 26 para. 20 in force at 6.4.2024 for specified purposes by S.I. 2024/440, reg. 2(2)

21 (1) On an appeal under paragraph 19(1) that is notified to the tribunal, the tribunal may affirm or cancel HMRC's decision. U.K.

(2) On an appeal under paragraph 19(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 decision in relation to a penalty under this Schedule, the tribunal may rely on paragraph 13—

(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 13 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 20(1)).

Commencement Information

I19 Sch. 26 para. 21 in force at 1.1.2023 for specified purposes by S.I. 2022/1278, reg. 2(2)

I20 Sch. 26 para. 21 in force at 6.4.2024 for specified purposes by S.I. 2024/440, reg. 2(2)

Regulations: supplementary provision U.K.

22 (1) Regulations under this Schedule are to be made by statutory instrument. U.K.

(2) A statutory instrument containing regulations under paragraph 11 (powers to amend Part 2) may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, the House of Commons.

(3) A statutory instrument containing regulations under paragraph 16 (assessments) is subject to annulment in pursuance of a resolution of the House of Commons.

(4) Regulations under this Schedule may include transitional, transitory and saving provision.

Commencement Information

I21 Sch. 26 para. 22 in force at 1.1.2023 for specified purposes by S.I. 2022/1278, reg. 2(2)

I22 Sch. 26 para. 22 in force at 6.4.2024 for specified purposes by S.I. 2024/440, reg. 2(2)