As part of the process of unifying its powers after the merger of the Inland Revenue and Customs and Excise, HMRC included new provisions in Finance Act 2007 for imposing penalties for incorrect returns, including incorrect PAYE returns. The new penalty regime applies to returns in respect of any period commencing on or after 1 April 2008 which are completed on or after 1 April 2009.
The new regime imposes penalties by reference to three categories of ‘behaviour’ consisting of:-
Under the new regime, the only mitigation allowed is for co-operation and the minimum penalty after mitigation is laid down by statute.
The new penalty for incorrect PAYE returns replaces the penalty previously chargeable under TMA 1970, s. 98A(4).