Paragraph 12

(1)

Paragraph 6 (amount of penalty: PAYE and CIS amounts) is amended as follows.

(2)

For sub-paragraph (1) substitute—

“(1)
P is liable to a penalty under this paragraph, in relation to each tax, each time that P makes a default in relation to a tax year.”

(3)

In sub-paragraph (2)—

(a)

in the opening words, after “default” insert “ in relation to a tax year ”;

(b)

in paragraph (a), at the end insert “ of tax payable in relation to the tax year ”;

(c)

in paragraph (b), at the end insert “ payable in relation to the tax year ”;

(d)

in paragraph (c), at the end insert “ payable in relation to the tax year ”;

(e)

in paragraph (d), at the end insert “ and due for the tax year ”.

(4)

For sub-paragraphs (3) to (7) substitute—

“(3)
But where a failure to make one of those payments (or to pay an amount comprising two or more of those payments) would, apart from this sub-paragraph, constitute the first default in relation to a tax year, that failure does not count as a default in relation to that year for the purposes of a penalty under this paragraph.
(4)
The amount of the penalty for a default made in relation to a tax year is determined by reference to—
(a)
the amount of the tax comprised in the default, and
(b)
the number of previous defaults that P has made in relation to the same tax year.
(5)
If the default is P's 1st, 2nd or 3rd default in relation to the tax year, P is liable, at the time of the default, to a penalty of 1% of the amount of tax comprised in the default.
(6)
If the default is P's 4th, 5th or 6th default in relation to the tax year, P is liable, at the time of the default, to a penalty of 2% of the amount of tax comprised in the default.
(7)
If the default is P's 7th, 8th or 9th default in relation to the tax year, P is liable, at the time of the default, to a penalty of 3% of the amount of tax comprised in the default.
(7A)
If the default is P's 10th or subsequent default in relation to the tax year, P is liable, at the time of the default, to a penalty of 4% of the amount of tax comprised in the default.”

(5)

In sub-paragraph (8), for paragraph (b) substitute—

“(b)
a previous default counts for the purposes of sub-paragraphs (5) to (7A) even if it is remedied before the time of the default giving rise to the penalty.”

(6)

After sub-paragraph (8) insert—

“(8A)
Regulations made by the Commissioners for Her Majesty's Revenue and Customs may specify—
(a)
circumstances in which, for the purposes of sub-paragraph (2), a payment of less than the full amount may be treated as a payment in full;
(b)
circumstances in which sub-paragraph (3) is not to apply.
(8B)
Regulations under sub-paragraph (8A) may—
(a)
make different provision for different cases, and
(b)
include incidental, consequential and supplementary provision.”