P11D – late submissions can be expensive!

Why it pays to be on time – plus reasonable excuses for appealing penalties

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HMRC can charge penalties if P11D Expenses and Benefits are not received by 6 July after the end of the tax year. Section 98(1)(b) Taxes Management Act 1970 provides for penalties for late forms P11D.

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.

HMRC’s guidance can be found within its Compliance Operational Guidance from COG914060 onwards.

Section 98(4) provides that no continuing penalty can be imposed after the failure has been remedied.

Reasonable excuse for appealing penalties

Two types of penalties can be imposed by HMRC – a penalty for the first 12 months’ delay and a penalty for over 12 months’ delay. For both penalties, an appeal can be made if there is a reasonable excuse for the delay. The reasonable excuse must cover the whole of the period of lateness.

Reasonable excuse cannot be defined in absolute terms. The reasonableness will vary from case to case. Generally, you are looking for some circumstance which:

  • is beyond the employer’s or contractor’s control and
  • made the failure unavoidable and
  • evidence that the failure was remedied without unreasonable delay once that obstacle was out of the way.

COG914050 provides examples on calculating the penalty for failure to submit end of year returns and failure to submit form P11D(b). This example gives advice on how to apply both the first 12 months and over 12 months of failure in practice.

Before making any submissions, take a look at our article on how to avoid common errors and omissions when submitting P11Ds.

ACCA’s full guide to benefits and forms P11D is available from our website.