How does HMRC calculate the failure to notify penalty?
No penalty is due unless there is tax or duty unpaid because of the failure. The only exception is for some Excise Duty registrations where the business is required to obtain approval before they can commence trading. If HMRC is told about the taxable activity or liability, it will allow a reduction for disclosure, with larger reductions if the disclosure is unprompted. A disclosure is unprompted if it is made at a time when the person making it has no reason to believe that HMRC have discovered or are about to discover the failure to notify. This includes reducing a penalty for a non-deliberate failure to nil when HMRC: • told about the failure within 12 months • then given full and complete assistance to help quantify the tax due If there has been a failure to notify and tax has been unpaid for more than 12 months, then the minimum penalty is 10 per cent. This will increase where the failure was: • deliberate, but without concealment – minimum penalty of 20 per cent • deliberate with
