Income Tax (Earnings and Pensions) Act 2003 section Schedule 5 paragraphs 57A–57E

Penalties

Section Schedule 5 paragraphs 57A–57E set out the penalty regime that applies when a company fails to file its share scheme return on time, submits an inaccurate or non-compliant return, and explain how penalties are assessed, enforced and appealed.

• A company that fails to deliver its annual share scheme return on time faces an initial £100 penalty, rising by £300 at three months and again at six months, with daily penalties of £10 applying after nine months
• A return that is filed in the wrong format or contains a material inaccuracy — whether careless, deliberate or uncorrected — can attract a penalty of up to £5,000 as determined by HMRC
• HMRC must assess and notify the company of any penalty within 12 months of the liability arising (or, for inaccuracy penalties, within 12 months of HMRC becoming aware of the inaccuracy and no later than six years from the date of liability), and the penalty must be paid within 30 days of the notice or 30 days after any appeal is resolved
• A company may appeal against both the imposition and the amount of any penalty within 30 days of the penalty notice, and the tribunal may affirm, cancel or adjust the penalty on appeal