P11D(b) penalties

P11D(b) penalties

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If a tax return is late, the £100 penalty is reduced to the amount of the balancing payment (so if the tax is paid pre deadline but the SAR submitted after, the penalty is reduced to nil).

Is the same true for P11D's and Class 1A? I have a client who submitted the P11D(b) late but paid all the class 1A on time, will their £100 penalty for late filing still stand in full?
Thomas Peterson

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By andymeeson
09th Aug 2006 11:20

Strictly speaking, no.
The penalty for tax returns (TMA 1970 s.93) includes specific provisions capping it to the tax outstanding at 31 January. Early payment will therefore automatically cancel the penalty.

Penalty provisions for the P11D(b) are given by Reg. 81 of SI 2001/1004: £100 a month or part month per 50 employees.

The Reg. 81 penalty "shall not exceed the total amount of Class 1A contributions payable in respect of the year to which the return in question relates" - R81(5).

Where this differs from s.93 is that it doesn't say "paid late" or "outstanding at 19 July", it simply says payable for the year.

So: if the total Class 1A is less than £100 (because there are no/few BIKs), the monthly penalty is reduced. If the Class 1A exceeds £100 but was all paid on time, there is technically no reduction.

However, R81(8) allows the Board to mitigate penalties, so they may perhaps waive them if the Class 1A was collected in time - but they aren't required to!

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