Finance Act 2021

Time limit for assessments

17 (1) An assessment of a penalty under this Schedule may not be made after—

(a) the later of date A and (where it applies) date B, or

(b) where the penalty is to be assessed in respect of a failure (or failures) to make, on or before the due date, a return in digital reporting sub-group (3) or (4) of group 1B or 2B or digital reporting sub-group (2) of group 3B, the later of date A and (where it applies) date C.

(But see sub-paragraphs (7) and (8).)

(2) Date A is the end of the period of 2 years beginning with—

(a) if the penalty is to be assessed in respect of a single failure, the day on which the failure occurred;

(b) if the penalty is to be assessed in respect of more than one failure in the same month or, as the case may be, the same calendar quarter (see paragraph 15(9)), the day on which the latest of the failures occurred.

(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 liability to tax which would have been shown in the relevant return, or

(b) if there is no such assessment, the date on which that liability is ascertained or it is ascertained that the liability is nil.

(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  an appeal that has been brought has not been determined or withdrawn;

• “relevant return” means—

  (a)

  if the penalty is to be assessed in respect of a single failure to make a return on or before the due date, that return;

  (b)

  if the penalty is to be assessed in respect of more than one failure to make a return, on or before the due date, in the same month or, as the case may be, the same calendar quarter (see paragraph 15(9)), the return for which there was the latest due date in the period in question.

(5) If more than one return is the relevant return by virtue of paragraph (b) of the definition of “relevant return” in sub-paragraph (4) and the same day is not date B in relation to all of those returns, treat date B as being the latest of those days.

(6) Date C—

(a) applies where, on date A, it was not reasonable to expect HMRC to be aware that the person was required to make the return (or the returns), and

(b) is the last day of the period of 12 months beginning with the first day on which it was reasonable to expect HMRC to be aware that the person was required to make the return (or one of the returns).

(7) Sub-paragraph (8) applies where—

(a) a person is liable to a penalty in respect of a failure to make a return because condition A in paragraph 15 is met,

(b) that condition is only met because the person has the maximum number of penalty points for the group of returns to which the return belongs on being awarded after that failure a penalty point in respect of an earlier failure (or earlier failures), and

(c) when the penalty point is awarded in respect of the earlier failure (or earlier failures) an assessment of the penalty to which the person is liable may no longer be made because of sub-paragraph (1).

(8) Where this sub-paragraph applies—

(a) sub-paragraph (1) does not apply, and

(b) the assessment of the penalty may instead be made during the period of 12 months beginning with the first day on which it was reasonable to expect HMRC to be aware of the earlier failure (or one of the earlier failures).