SCHEDULES
C2C3C4SCHEDULE 41Penalties: failure to notify and certain VAT and excise wrongdoing
Sch. 41 applied (with modifications) (22.7.2020) by Finance Act 2020 (c. 14), Sch. 16 para. 11(6) (with Sch. 16 para. 11(7))
Sch. 41 applied (with modifications) (22.7.2020) by Finance Act 2020 (c. 14), Sch. 16 para. 13
Potential lost revenue
I1C1C57
1
“The potential lost revenue” in respect of a failure to comply with a relevant obligation is as follows.
F31A
In the case of an obligation under section 7 of TMA 1970 which arises by virtue of subsection (1B) of that section, the potential lost revenue is so much of any income tax or capital gains tax to which P is liable in respect of the tax year in question as is, by reason of the failure to comply with the obligation—
a
where the period specified in subsection (1C)(b)(ii) of that section applies and ends after the relevant date, unpaid at the end of that period, or
b
in any other case, unpaid on the relevant date.
1B
For the purposes of sub-paragraph (1A) the relevant date is—
a
31 January following the tax year, or
b
if, after that date, HMRC refund a payment on account in respect of the tax year to P, the day after the refund is issued.
2
In the case of a relevant obligation relating to income tax or capital gains tax and a tax year F4 (not falling within sub-paragraph (1A)), the potential lost revenue is so much of any income tax or capital gains tax to which P is liable in respect of the tax year as by reason of the failure is unpaid on 31 January following the tax year.
3
In the case of a relevant obligation relating to corporation tax and an accounting period, the potential lost revenue is (subject to sub-paragraph (4)) so much of any corporation tax to which P is liable in respect of the accounting period as by reason of the failure is unpaid 12 months after the end of the accounting period.
4
F54A
In the case of a relevant obligation relating to diverted profits tax, the potential lost revenue is the amount of diverted profits tax for which P would be liable at the end of the period of 6 months beginning immediately after the accounting period assuming—
a
a charge to diverted profits tax had been imposed on P on the taxable diverted profits arising to P for the accounting period, and
b
that tax was required to be paid before the end of that period of 6 months.
F84B
In the case of a relevant obligation relating to digital services tax and an accounting period, the potential lost revenue is so much of any digital services tax payable by members of the group for the accounting period as by reason of the failure is unpaid 12 months after the end of the accounting period.
5
In any case where the failure is a failure to comply with the obligation under paragraph 2(4) of Schedule 11 to VATA 1994, the potential lost revenue is the value added tax on the acquisition to which the failure relates.
6
In the case of any other relevant obligation relating to value added tax, the potential lost revenue is the amount of the value added tax (if any) for which P is, or but for any exemption from registration would be, liable for the relevant period (see sub-paragraph (7)), but subject to sub-paragraph (8).
7
“The relevant period” is—
a
in relation to a failure to comply with paragraph 14(2) or (3) of Schedule 1 to VATA 1994, paragraph 8(2) of Schedule 3 to that Act or paragraph 7(2) or (3) of Schedule 3A to that Act, the period beginning on the date of the change or alteration concerned and ending on the date on which HMRC received notification of, or otherwise became fully aware of, that change or alteration, and
b
in relation to a failure to comply with an obligation under any other provision, the period beginning on the date with effect from which P is required in accordance with that provision to be registered and ending on the date on which HMRC received notification of, or otherwise became fully aware of, P's liability to be registered.
8
But the amount mentioned in sub-paragraph (6) is reduced—
a
if the amount of the tax mentioned in that sub-paragraph includes tax on an acquisition of goods from another member State, by the amount of any VAT which HMRC are satisfied has been paid on the supply in pursuance of which the goods were acquired under the law of that member State, and
b
if the amount of that tax includes tax chargeable by virtue of section 7(4) of VATA 1994 on a supply, by the amount of any VAT which HMRC are satisfied has been paid on that supply under the law of another member State.
F68A
In the case of a relevant obligation under section 47 of FA 1996 (which relates to landfill tax), the potential lost revenue is the amount of tax (if any) for which P is liable for the period—
a
beginning with the date with effect from which P is required in accordance with that section to be registered or (as the case may be) from which the Commissioners may register P under that section, and
b
ending with the day on which HMRC received notification of, or otherwise became fully aware of, P's liability to be registered or (as the case may be) the Commissioners' power to register P.
9
In the case of a relevant obligation under any provision relating to insurance premium tax, aggregates levy, climate change levy F7... or air passenger duty, the potential lost revenue is the amount of the tax (if any) for which P is liable for the period—
a
beginning on the date with effect from which P is required in accordance with that provision to be registered, and
b
ending on the date on which HMRC received notification of, or otherwise became fully aware of, P's liability to be registered.
10
In the case of a failure to comply with a relevant obligation relating to any other tax, the potential lost revenue is the amount of any tax which is unpaid by reason of the failure.
Sch. 41 modified (with effect in accordance with s. 42(2), Sch. 12 para. 29(1) of the amending Act) by Finance Act 2018 (c. 3), Sch. 12 paras. 33, 34