Penalties for failure to notify

Produced by Tolley in association with Philip Rutherford

The following Owner-Managed Businesses guidance note Produced by Tolley in association with Philip Rutherford provides comprehensive and up to date tax information covering:

  • Penalties for failure to notify
  • Introduction
  • When is a penalty chargeable?
  • Initial failure to notify
  • Continuing failure to notify
  • Calculating the penalty ― behaviour of the taxpayer
  • Introduction
  • Rates
  • Interaction with overseas penalties
  • Non-deliberate
  • More...

Penalties for failure to notify


The onus is on the taxpayer to inform HMRC of the chargeability to tax. Each of the taxes has different legislative provisions, but the common theme is that a taxpayer must notify HMRC when certain criteria are met, including (but not limited to):

  1. becoming liable to income tax, corporation tax or capital gains tax (for example a new source of income such property income)

  2. beginning a new activity or changing an existing activity which will lead to a tax/VAT liability (for example setting up a new trade or where there is material change in the nature of supplies made by a person previously exempted from VAT registering), or

  3. reaching certain thresholds (for example, the statutory limits for VAT registration)

As each tax has separate requirements, these are discussed below. It also follows that a taxpayer may have separate notification requirements for different taxes. For example, a taxpayer may have to notify HMRC of a liability to corporation tax and VAT separately, on different dates, or risk attracting a penalty for late notification of each.

FA 2008 sought to set out a coherent and harmonised penalty regime across all taxes. The penalties for failure to notify saw significant changes, with a potential penalty charged based on the behaviour of the taxpayer and the amount of tax outstanding, which is known as the potential lost revenue. The regime applies where the requirement to notify HMRC arises on or after 1 April 2010. A full list of taxes to which the regime applies can be found in FA 2008, Sch 41, para 1.

If a taxpayer fails to meet the obligation to notify HMRC, then a penalty may be due. There is no facility for the penalty to be suspended, unlike the situation where certain penalties are charged for inaccuracies in returns. See the Suspended penalties for inaccuracies in returns guidance note.

If a taxpayer has overseas matters which required notification to HMRC, then these may attract

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