Income Tax (Earnings and Pensions) Act 2003 Schedule 3 paragraph 40E

Penalty for incorrect or non-compliant returns

Paragraph 40E imposes penalties on scheme organisers who submit returns that do not comply with the required format or that contain material inaccuracies.

• A penalty applies where a return under paragraph 40B, or accompanying information, is not submitted in accordance with the requirements of paragraph 40D
• A penalty also applies where the return contains a material inaccuracy that is either careless or deliberate, or that is not corrected as required by paragraph 40B(11)
• The scheme organiser is liable for a penalty of an amount decided by HMRC, subject to a maximum of £5,000
• An inaccuracy is treated as careless if it results from the scheme organiser's failure to take reasonable care