RSTP3005 - Penalties for failing to make a tax return on time

RSTPA guidance on the penalties which a person may be liable to for failing (or continuing to fail) to make a tax return on time.

RSTP3005 - Penalties for failing to make a tax return on time

If you fail to make a tax return of the type specified in the table below on or before the filing date (see RSTP1000 and column 4 of the table below), you are liable to a penalty.

If your failure continues, or within a certain period you fail to make another type of return specified in the table in relation to the same tax, you are liable to further penalties (which depending on the circumstances may be fixed or tax-geared / percentage-calculated) depending on either how long the failure has continued for, or how many other failures to make a similar tax return there have been.

For further guidance on the different types and amounts of LBTT penalties for failing to make a tax return on time see RSTP3006.

For further guidance on the different types and amounts of SLfT penalties for failing to make a tax return on time see RSTP3007.

You are not liable to any penalty for failing to make a tax return on time if you satisfy us or (on appeal) the tribunal that there is a reasonable excuse for that failure. See RSTP3022 for guidance on what may, and may not, constitute a reasonable excuse.

If we have reason to believe that you should have made a tax return we may issue a Revenue Scotland determination (see RSTP1007) which, in addition to making a determination of your tax liability, will also apply interest on the unpaid tax backdated from the filing date of the return that you should have made but failed to make (see RSTP4002).

RSTPA 2014 section 159

Returns to which these penalties relate

The table below, based on the one in section 159(1) of the RSTPA 2014, describes the returns to which the penalties for failing to make a tax return on or before the filing date apply. Column 2 shows the tax to which the return relates. Column 3 contains the legislative references to each of the different returns. Column 4 provides for ease of reference the filing date definitions for each return.

  Tax to which return relates Return Filing date’ definition – section references are to the LBTT(S)A 2013 or LT(S)A 2014 as appropriate
1 Land and Buildings Transaction Tax

(a) Return under section 29, 31, 33 or 34 of the LBTT(S)A 2013.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(b) Return under paragraph 10, 11, 20, 22 or 30 of Schedule 19 to the LBTT(S)A 2013.

(a)

Return under section 29 (duty to make a return for a notifiable transaction) (see LBTT4004): section 29(3) - ‘the return must be made before the end of the period of 30 days beginning with the day after the effective date of the transaction’;

Return under section 31 (return where contingency ceases or consideration is ascertained) (see LBTT4021): section 31(3) – ‘the return must be made before the end of the period of 30 days beginning with the day after the date on which the event occurred’;

Return under section 33 (further return where relief is withdrawn) (see LBTT4022): section 33(3) – ‘the return must be made before the end of the period of 30 days beginning with the day after the date on which the relevant event occurred’;

Return under section 34 (return or further return in consequence of a later linked transaction) (see LBTT4015): section 34(3) – ‘the return must be made before the end of the period of 30 days beginning with the day after the effective date of the later transaction’.

(b)

Return under paragraph 10 of schedule 19 (return in relation to regular review of a lease) (see LBTT6015) paragraph 10(3) – ‘the return must be made before the end of the period of 30 days beginning with the day after the review date’;

Return under paragraph 11 of schedule 19 (return in relation to a lease which is assigned or terminated) (see LBTT6017): paragraph 11(3) – ‘the return must be made before the end of the period of 30 days beginning with the date after the day (‘the relevant day’) on which the lease is assigned or terminated.’;

Return under paragraph 20 of schedule 19 (return in relation to a lease continuing after a fixed term) (see LBTT6020): paragraph 20(3)(a) – ‘the buyer must make a return in respect of that transaction before the end of the period of 30 days beginning with the day after the end of that 1 year period’;

Return under paragraph 22 of schedule 19 (return in relation to grant of a new lease following a lease continuing after a fixed term) (see LBTT6021): paragraph 22(2)(a) – ‘the buyer must make a return in respect of that transaction before the end of the period of 30 days after the end of that term’;

Return under paragraph 30 of schedule 19 (return in relation to a lease where the term is extended or rent is increased) (see LBTT6029): paragraph 30(2)(a) – ‘the buyer must make a return in respect of the transaction before the end of the period of 30 days beginning with the day after the relevant date’.
2 Scottish Landfill Tax

Return under regulations made under section 25 of the LT(S)A 2014.

Regulation 10 of The Scottish Landfill Tax (Administration) Regulations 2015 (see SLfT5002): regulation 10(2): ‘a registrable person shall make each return not later than 44 days following the end of the period to which it relates.’

 

Circumstances under which penalties in relation to failing to make a tax return on time can be reduced

If you incur another penalty (‘penalty 2’) whose amount is determined by reference to the same liability to tax (other than a penalty for failing to pay tax on time, see RSTP3008, a penalty for failing to make a tax return on time specified in the table above or a penalty for failing to comply with a relevant requirement under section 22 or 23 of the LT(S)A 2014, see RSTP3019), the amount of any penalty for failing to make a tax return on time (‘penalty 1’) is reduced by the amount of this other penalty.

In other words, no reduction to penalty 1 occurs under this rule where penalty 2 is a fixed or ‘up to’ amount. Reduction to penalty 1 only occurs where penalty 2 is calculated as a proportion or a percentage of the same tax liability as penalty 1 and provided penalty 2 is not a penalty for failing to pay tax on time, failing to make a tax return on time or a penalty for failing to comply with a relevant requirement.

There are only three types of penalty in relation to the devolved taxes which would invoke this rule:

  • inaccuracy in a taxpayer document attributable to the taxpayer (see RSTP3011);
  • inaccuracy in a taxpayer document attributable to another person (see RSTP3012); and
  • failing to notify us about an under-determination or under-assessment of tax in a Revenue Scotland determination or assessment (see RSTP3013).

RSTPA 2014 section 174

The aggregate of any tax-geared (or percentage-based) penalties you incur in relation to failing to make a tax return on time must not exceed 100% of your tax liability. This rule does not apply to any fixed-amount penalties you incur for failing to make a tax return on time.

We may also reduce the amount of a penalty for failing to make a tax return on time if:

  • you disclose relevant information to us (see RSTP3024); or
  • we think it is right to do so because of special circumstances (see RSTP3023).

RSTPA 2014 sections 175 and 177

Assessing and paying the penalty

We must make an assessment and notify you of your liability to any penalty for failing to make a tax return on time (stating the transaction or period against which the penalty has been assessed) on or before the later of:

  • the last day of the period of 2 years beginning with the filing date, and
  • (where it applies); the last day of the period of twelve months beginning with the end of the ‘appeal period’ (see below) for the assessment of the tax liability which would have been shown in the tax return or, if there is no such assessment, the date on which the liability is ascertained or it is ascertained that the liability is nil.

The ‘appeal period’ is the period during which an appeal could be brought (see RSTP6008), or the period during which an appeal that has been brought has not been determined or withdrawn.

Subject to the above time limit, we can make:

  • a supplementary assessment of your liability to the penalty if an earlier assessment we made was calculated against an underestimate of your tax liability which would have been shown in a tax return (had you made one to us); or
  • a replacement assessment of your liability to the penalty if an earlier assessment we made was calculated against an overestimate of your tax liability which would have been shown in a tax return (had you made one to us).

We can combine an assessment (or supplementary or replacement assessment) of the penalty with any assessment we make in relation to your tax liability (such as a Revenue Scotland determination - see RSTP1007, or a Revenue Scotland assessment - see RSTP1008).

You must pay the penalty no later than 30 days from the date on which we issued the notice of the penalty to you.

We will charge interest on the amount of any unpaid penalty from the date on which the penalty is due to be paid until you pay it (see RSTP4003).

Any penalty for failing to make a tax return on time is treated for enforcement purposes (see RSTP5001) as an assessment to tax. This means that we have the same debt enforcement and recovery powers in relation to this penalty (and other penalties) as we have in relation to tax.

RSTPA 2014 sections 179 and 180

Ref ID

RSTP3005

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