Penalties can be charged in the following circumstances.
Failure to notify penalty
An insurer or a taxable intermediary who failed to notify HMRC that it should have been registered before 1 April 2010 is liable to a penalty of £250 or 5% of the relevant tax, whichever is greater1 unless it can satisfy HMRC or, on appeal, the tribunal, that there is a reasonable excuse for not registering2.
The relevant tax means the tax for the period from the date it is required to be registered to the date HMRC is notified of the liability to be registered or the date HMRC becomes aware of the requirement to be registered3.
A penalty will not be charged if either the insurer or taxable intermediary has been convicted of an offence, whether under FA 1994, Sch 7 or otherwise, or has been assessed to a penalty under the provisions relating to evasion4 (see below).
The Treasury has the power to amend by order the amount of the penalty if there has been a change in the value of money which appears to the Treasury to justify a change5.
Failure to notify where you are required to notify HMRC that you should be registered on or after 1 April 2010 will result in a late notification penalty based on the same requirements to notify liability as before 1 April 2010. However, it is possible to reduce the penalty if you make a full disclosure to HMRC6.