Highlighting TPS Tax Penalties
One of the most common questions asked of tutors at TPS is where to find the penalties.
You'll remember from TC PoT that there is a unified system of penalties that applies to most taxes, setting out the penalties for late notification of chargeability, late returns, late payments and incorrect returns. The observant will have noticed that whilst these penalties appeared on your rates sheet at PoT, you will have to track them down yourself at TPS.
Before we look at where to find these, a quick word on legislation: this should be used wherever there are long definitions, stepped calculations or lists of facts. It is only helpful if you use it throughout the course and highlight as you go.
For some top tips on using these books have a look at this short vlog on the topic. You can also find more guidance on using your books within the CABLE online resources for TPS Tax, and it’s essential to check this out.
Turning specifically to penalties, this handy infographic will remind you of the key penalties covered at PoT. You might want to print this out as part of your revision to try to memorise key facts, but we recommend you also highlight the penalties - and tab your books so you can find them.
If your books already have a lot of sticky tabs in them think about using a different colour for penalties or putting the tabs along the top of bottom of the pages instead of the side. This will help you to find them quickly.
So, where do you find the penalties? Unfortunately, they are part of a number of different Finance Acts and not grouped together in one chapter of an Act. That's why it's worth highlighting and tabbing them. Use your information from PoT Module 1 to ensure that you have highlighted the key facts about each penalty.
Here's the key legislation (including page references for your 2015/16 books):
Penalties for Errors
- FA 2007 Sch 24 (Book 1, begins on page 3,443)
- Key paragraphs = Para 1 (introduction), para 3 (types of error), para 4(2) (basic penalties), para 5 (definition of ‘potential lost revenue’), para 9(2) (definition of ‘unprompted disclosure’), para 10 (reductions for disclosure).
Penalties for Failure to Notify Chargeability
- FA 2008 Sch 41 (Book 1, begins on page 3,607)
- Key paragraphs = Para 1 (failures covered by this penalty), para 5 (degrees of culpability), para 6(2) (basic penalties), para 7(1) (definition of ‘potential lost revenue’), para 12(3) (definition of ‘unprompted disclosure’), para 13 (reductions for disclosure)
Penalties for Failure to Make Returns (includes late returns)
- FA 2009 Sch 55 (Book 2, begins on page 847)
- Key paragraphs = Para 1 (failures covered by this penalty), paras 3-6 (amounts of penalty based on lateness of filing)
Penalties for Failure to Make Payments on Time
- FA 2009 Sch 56 (Book 2, begins on page 869)
- Key paragraphs = Para 1 (payments covered by this penalty, and date from which penalty runs), paras 3(2) - 3(4) (penalty percentages)
Remember that every module has a list of key legislation at the back of it. If you can't locate anything, then you have the option to post a question on the CABLE discussion board and one of your tutors will point you in the right direction.
Still on the topic of penalties, our tax tutors have put together some handy hints to keep you on track with how to deal with these in your TPS tax studies.