Where is legislation for late filing of P11Ds?

Don't know how you got there using the supplied directions ... but well done on arriving there.

Just noticed this - where did you say in the OP that "we [w]ere dealing with NIC"? You asked about P11Ds, not P11D(b). If the question was only about, or also about, P11D(b) then ignore what I and others have said about s 98 TMA. Late (or non-) filing of P11D(b) is indeed governed by reg 81(2) ff. SSCR 2001 which uses the s 100 TMA machinery but where the time limit is not governed by s 103 TMA but by reg 81(2) and (3) - six years from the failure or in para (3) cases possibly later.

I'm also intrigued by your reference to 2015 - what's the significance?

No you haven't wasted my time. As so often this area of tax is bedevilled by the subtle and unnecessary differences between income tax on earnings and Classes 1 and 1A NIC, exempted here by the different regimes for P11Ds and P11D(b)s and payment of Class 1A NICs and the penalties associated with failure to file and, in the case of Class 1A to pay.

(The fact that "payrolled" benefits are Class 1A not Class 1 is another unnecessary quirk, from a long list)

Bear in mind though that Class 1A penalties are not (so far as I am aware) avoided by remedying a failure, as the real point of the penalty is to penalise a failure to pay on time.

Just to be clear ... the legislation referenced in the ACCA article doesn't appear to be specific to P11Ds - but it does say: "HMRC can charge penalties if due P11D Expenses and Benefits forms are not received by 6 July after the end of the relevant tax year - per Section 98(1)(b) Taxes Management Act 1970".

Section 98 (1) (i) provides for a maximum initial penalty of £300 per form, for failure to submit forms P11D.
HMRC needs to make an application to the first tier tribunal who can decide whether to impose these penalties.

Section 98 (1) (ii) provides for continuing penalties of a maximum of £60 per day thereafter, until the failure has been remedied.
These penalties can only be considered after an initial penalty has been imposed by the tribunal.

anything is more helpful than the hmrc guidance in the hmrc manuals !!! - obviously hmrc prefer to not point out the realities here for whatever reason.

https://www.gov.uk/hmrc-internal-manuals/compliance-operational-guidance...

What do you mean by "retrospectively" in this context? All penalties have to be retrospective in the sense that they penalise conduct after it has actually happened, or not happened when it should have.

If you mean is there a time limit for starting proceedings under s 100C, the answer is yes - they must because started "within six years after the date on which the penalty was incurred or began to be incurred" (s 103(2) TMA).

As to daily penalties, s 103(2) applies to any determination of them as well, but they cannot be imposed unless an initial penalty has been imposed by the FTT. Thus it could happen that the proceedings for the initial penalty were started in time, but by the time it was imposed a determination for the follow on daily penalties would be out of time.

Note that remedying the failure prevents penalties being imposed, another reason why HMRC would not lightly start proceedings.

Your reference to "deliberate" is wide of the mark. Deliberate failure to file a P11D is simply a failure like negligent failure: the reasonable excuse let out in s 118(2) applies, or it doesn't. I cannot understand why employer would deliberately, ie dishonestly, fail to file one, unless they were conspiring with an employee receiving benefits seeking to evade tax by omitting them from a return.

If you suspect that the employer has been colluding/conspiring with an employee receiving benefits in order to evade tax by omitting them from a return, then you are also entering David Winch territory.

The fact that the omission was always of the same employee and happened every single year for a decade lends a lot of credence to your suspicion.
So I guess the questions (behind the one asked by your post) are ... how were the omissions discovered (and by whom)? / have you informed the client? / have they indicated a desire to rectify the omissions?

[Not relevant but I can't resist - I don't suppose the 'lucky' employee was the owner of the business, or a family member of that person?]

It's Reg 80 & 81 SSCR 2001 plus Sch 24 FA 2007

I'm not sure you are right. As I understand it, each P11D and P11D(b) for each employee is a separate return, so you have to look at each separately to see if it contains an inaccuracy.

As far as the P11D is concerned I do not see how a Sch 24 penalty can arise as there is no PLR. "Income tax - return for the purpose of PAYE Regulations" is I would have thought a reference only to the RTI return. It certainly doesn't apply to a P11D(b).

Reg 81 (1) Schedule 24 to the Finance Act 2007 (penalties for errors) applies to the return of contributions referred to in regulation 80(1) (return by employer) as if—

(a)Class 1A contributions were a tax;

Yes indeed, that's what makes Sch 24 applicable to Class 1A. But it doesn't extend the meaning of the entry in the table. Anyway, reg 81(1) applies Sch 24 "as if Class 1A were a tax", not "were *income* tax"

Quickly:

Well, I thought OP's question was about a return not filed and about one filed but was inaccurate. Reg 81 is about both 'failure to make a return and incorrect returns'.

Return not filed: I thought the learned members, yourself included, have adequately dealt with it, particularly referring to Reg 81(2) on, Reg 81(8) also being in point.

Inaccurate return: this is what my comment was about and I believe the 'tax' is covered by Sch 24.

We’re obviously at cross-purposes somewhere but I can’t quite tell where. You say you thought “OP's question was about a return not filed and about one filed but was inaccurate”.

What OP has said so far:

Where is legislation for late filing of P11Ds?
Original question

“Do you know whether HMRC can apply penalties under S98 TMA 1970 retrospectively please? If HMRC becomes aware after 10 years that a P11D has deliberately not been submitted for the 2014/15 year, can the penalties be backdated to say 6 July 2015 or can the daily penalties start only from when HMRC realise the default?” 8/8 08.41

“I was fearing the possibility that initial and daily penalties could apply (retrospectively) from first default around 10 years ago (and apply to all subsequent years of default), if HMRC were to today become aware.” 8/8 10.20

“P11Ds and P11D(b)s have been filed but the P11D for a single employee has been omitted in each of the last 10 years (hence reference to 2015). I viewed this as a P11D being omitted and an underpayment of Class 1A NIC when drafting the OP” 8/8 10.38

You then resurrected the thread with:

“OP says the the [sic] return filed by the employer was inaccurate as it omitted one of the employees.” 12/8 08.56

Where does OP refer, even obliquely to inaccuracy? The question and the later responses are all about the non-filing of a P11D and P11D(b) with the consequent non-payment of Class 1A for one employee out of more than one (or the statement that “P11Ds and P11D(b)s have been filed” makes no sense).

You then in your post of 08.56 talk about what the possible penalties for inaccuracy are but only in relation to Class 1A (I assumed for the correct reason that P11Ds (IT) cannot give rise to penalties for inaccuracy).

You are I fully accept correct to say that regulation 81(1) gives the necessary extension of Schedule 24 to Class 1A NICs. I queried two things about your posts:

• Is this actually a case of inaccuracy or as the OP says late filing of one P11D and P11D(b) and late payment of the Class 1A

• If there is a single return which is required to include all cases falling within the PAYE regulations, can a Schedule 24 penalty, unaffected by regulation 81, arise?

Now you say you thought the question was about both a return not filed and a filed but inaccurate return, but it clearly isn’t. In my view, which as usual I’m quite open to be shown to be wrong, is that:

1. There is no single P11D covering all employees in receipt of benefits and other items of income as listed.

2. There is no single P11D(b) ditto.

3. Therefore the issue is late filing penalties for both IT & Class 1A and late payment penalties for NICs. Penalties for one kind of failure do not frank the other.

On that basis the learned members have, as you say, adequately dealt with late filing of P11D(b)s, ie regulation 81(2) ff SSCR 2001.

The learned members have also adequately dealt with the provisions for penalties for late filing of P11Ds, ie section 98 TMA.

The question of late payment penalties of Class 1A have not hitherto been addressed. The relevant provision is regulation 67B SSCR 2001 which applies Schedule 56 FA 2009 as if Class 1A was an amount of tax in item 3 of the Table (Item 3 is income tax shown in a pension scheme return).

But if I am wrong about the single return, then on the basis that the single P11D return has a box for the number of P11Ds required to be submitted and the single P11D has a box for the number of P11Ds required to be submitted and a place for the total tax payable, the returns may be inaccurate.

Class 1A NICs

Regulation 81(1) applies Schedule 24 as if Class 1A were a tax, as you correctly point out, so that where Schedule 24 uses the word “tax” (but refers to tax generally and not any specific tax) you substitute Class 1A NICs.

As I read it this means that paragraph 1 Schedule 24 imposes a penalty where P gives HMRC a document listed in the Table which leads to an understatement of a liability to Class 1A NIC. Where in the Table is the relevant document? In my view it is the last item:

“Any document which is likely to be relied upon by HMRC to determine, without further inquiry, a question about—

(a) P's liability to [Class 1A NICs],

(b) payments by P by way of or in connection with [Class 1A NICs]”

Schedule 24 can then apply according to its terms, the relevant substitution having been made, in relation to eg the calculation of PLR or the set-off of late payment penalties (paragraph 12(2)).

P11D

Inaccuracy in a P11D is covered by section 98(2) TMA with a maximum penalty of £3,000 (and see paragraph 12(1) Schedule 24).

I couldn't go over this in detail but having had a quick reading of your last post I think you're right. However, quickly, two points:

The return not filed - I was referring to one P11D which was not filed. Reg 85(1) PAYE Regulations, as you say, says it is required for each employee.

Incorrect return - the P11D(b) filed by the employer is incorrect because it didn't include the omitted employee's sum. This invokes Reg 81(1) of SSCR and consequently my post at 08.56 12 Aug should be correct.

Will go over this later in the week.

I agree with you now that a P11D is required for each employee but a P11D(b) is a global form. And so reg 81(1) applies.