What penalty applies for failing to pay Welsh devolved tax on time under section 122?

Under section 122 of the Tax Collection and Management (Wales) Act 2016, a person who fails to pay a devolved tax by the penalty date is liable to a penalty of 5% of the unpaid amount for land transaction tax, or 1% of the unpaid amount for landfill disposals tax. The penalty is triggered automatically once the deadline passes.

How is the penalty date determined under section 122?

The penalty date is generally 30 days after the filing date for a tax return or 30 days after the date by which the tax is required to be paid. Section 122 sets out a detailed table listing eleven different scenarios — including WRA determinations, assessments, amendments, corrections, anti-avoidance adjustments, deferred amounts, and postponed amounts — each with a corresponding penalty date.

Does section 122 apply to deferred and postponed tax amounts?

Yes. For land transaction tax where a deferral request has been made, the penalty date is 30 days after the deferred or refused amount becomes payable. For tax amounts postponed during a review or appeal, the penalty date is 30 days after the postponement period ends. The same percentage penalties then apply to any unpaid balance.

Can the Welsh Ministers change the penalty date rules under section 122?

Yes. Section 122 grants the Welsh Ministers the power to amend Table A1, which lists the penalty dates for different scenarios, by regulations. This allows the penalty date rules to be updated as needed without requiring primary legislation. A separate exception under section 122ZA also modifies penalties for repeated failures to pay landfill disposals tax.

Tax Collection and Management (Wales) Act 2016 section 122

Penalty for failure to pay tax on time

Section 122 sets out the penalties that apply when a person fails to pay a Welsh devolved tax by the relevant deadline, including the applicable penalty rates and the specific dates from which penalties are triggered for different types of tax and different circumstances.

A person who fails to pay a devolved tax by the penalty date is liable to a penalty of 5% of the unpaid amount for land transaction tax, or 1% for landfill disposals tax.
The penalty date is generally 30 days after the filing date for a tax return, or 30 days after the date by which the tax amount is required to be paid in other circumstances.
The section covers a wide range of scenarios, including tax due under returns, WRA determinations and assessments, amendments and corrections, anti-avoidance adjustments, deferred and refused amounts, charging notices, and postponed amounts under review or appeal.
A separate exception applies for multiple failures to pay landfill disposals tax on time (under section 122ZA), and the Welsh Ministers have the power to modify the table of penalty dates by regulations.

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