MTT55440 - Administration: Compliance: Penalties: Penalties relating to the self-assessment return
Source: gov.uk (2025-08-11)


If a group is registered for MTT, the filing member is obliged to submit a self-assessment return to HMRC for each period, unless a below-threshold notification is in effect (see MTT53000) (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt53000). If it fails to meet this obligation within the time limit, it will be liable to a penalty.

Therefore, a group will be liable to a penalty if:
- a self-assessment return has not been submitted for a period, and
- a valid below-threshold notification has not been made (or has been made and then withdrawn).
There will not normally be any partial mitigation of a penalty charged for failure to submit a return or notification on time. These penalties will apply automatically once the due date has passed, unless there is a reasonable excuse.

This is set out in paragraph 43, schedule 14 to Finance (No.2) Act 2023.

Amount of the penalty

The amount of penalty varies according to how long after the filing date the filing member submits the return or notification.

If the return or notification is delivered more than six months after the filing date, tax-related penalties may be charged if they are higher than the applicable flat-rate penalties.

The penalty is:
- £100, if the filing member submits the return or notification within 3 months of the filing date.
- £200, if the filing member submits the return or notification within 6 months of the filing date.
- the higher of £200 or 10% of the unpaid tax, if the filing member submits the return or notification within 12 months after the filing date.
- the higher of £200 or 20% of the unpaid tax, if the return or notification is not submitted within 12 months of the filing date.
The unpaid tax is the total amount of liability of group members for the accounting period that remains unpaid on the day after the filing date.

However, the penalties will increase if a group:
- was obliged to submit a self-assessment return for three consecutive accounting periods,
- received a penalty (through a filing member) relating to the self-assessment return for each of the first two of those periods, and
- is liable (through a filing member) to a penalty for the third period.
If these conditions are met, the amount of the flat-rate penalty for the third period (and any subsequent consecutive periods) will increase to:
- £500, if the filing member submits the return or notification within 3 months of the filing date.
- £1000, if the return or notification is not submitted within 3 months (the higher-of tests continue to apply as applicable).
Example

Filing member ‘A’ submits returns or notifications for the group’s accounting periods as follows:

Accounting period ended

Filing date

Date return or notification actually submitted

Penalty under FA23/SCH14/ PART11/PARA 43

31 December 2024

30 June 2026 (i.e. 18 months after end of first accounting period)

1 month late (i.e. filing made on 31 July 2027)

£100

31 December 2025

31 March 2027 (i.e. 15 months after end of accounting period)

7 months late (i.e. filing made on 31 October 2027)

£200, or if the unpaid tax on 1 April 2027 (the date a paragraph 43 penalty first arose) was more than £2000, 10% of the unpaid tax. Thus, if the unpaid tax on 1 April 2027 was £1,000,000, a £100,000 penalty would be due.

31 December 2026

31 March 2028 (i.e. 15 months after end of accounting period)

1 month late (i.e. filing made on 30 April 2028)

£500 (3rd consecutive accounting period)

31 December 2027

31 March 2029 (i.e. 15 months after end of accounting period)

13 months late (i.e. filing made on 30 April 2030)

£1000, or if the unpaid tax on 1 April 2029 (the date a paragraph 43 penalty first arose) was more than £5000, 20% of this unpaid tax. Thus, if the unpaid tax on 1 April 2029 was £1,000,000 a £200,000 penalty would be due.

31 December 2028

31 March 2030 (i.e. 15 months after end of accounting period)

On time

Nil

31 December 2029

31 March 2031 (i.e. 15 months after end of accounting period)

4 months late (i.e. filing made on 30 June 2031)

£200

31 December 2030

31 March 2032 (i.e. 15 months after end of accounting period)

1 month late (i.e. filing made on 30 April 2032)

£100

31 December 2031

31 March 2033 (i.e. 15 months after end of accounting period)

1 month late (i.e. filing made on 30 April 2033)

£500 (3rd consecutive accounting period)

Reasonable excuse

The filing member may make a claim that there is a reasonable excuse for not submitting the return or notification. When HMRC accepts a claim, a penalty is not charged. When a Tribunal has determined following an appeal that there was a reasonable excuse, HMRC will withdraw any penalty notice.

Insufficiency of funds is not a reasonable excuse.

If the filing member is reliant on another person to meet the obligation, it must take reasonable care to avoid the failure for this to be a reasonable excuse.

When a reasonable excuse ceases, the excuse is treated as continuing as long as the filing member remedies the failure without unreasonable delay.

See CH160000 for further guidance on reasonable excuse.

Assessment and notification of penalty

HMRC charge penalties relating to the self-assessment return by formal assessment. Where a penalty is assessed, HMRC will issue a penalty notice to the filing member stating:
- the amount of the penalty,
- the date of issue, and
- the time during which an appeal can be made.
The assessment of a penalty is to be treated for procedural purposes in the same way as an assessment to tax. It may be enforced as if it were an assessment to tax and can be combined with an assessment to tax. See FA23/SCH14/PART11/PARA43.

Time limits

An assessment of a penalty relating to self-assessment return must be made before the end of the period of 12 months beginning with:
- the end of the appeal period for the assessment of the liability to tax which would have been shown in the return, or
- if there is no such assessment, the date on which that liability is ascertained, or it is ascertained that the liability is nil.
Appeal period

‘Appeal period’ refers to the period during which the filing member:
- could appeal, or
- has made a valid appeal that has not been determined or withdrawn.
Liability and payment

A penalty relating to the self-assessment return is raised against the filing member and does not attract interest charges.

A penalty relating to the self-assessment return must be paid within 30 days of the day on which notification of the penalty is issued.

Payments received by the filing member will be ignored for corporation tax purposes if:
- the payment is received from a company (or companies) within the charge to corporation tax,
- the payment is received as part of an agreement between the filing member and that company (or companies) to reimburse or indemnify the filing member in respect of a penalty relating to the information return, and
- the payments do not, in total, exceed the amount of the penalty.
Appeal

A filing member may appeal against a penalty. Once appealed against, the collection of a penalty is postponed. This means that no action can be taken to collect a penalty while it remains under appeal.

Reduction in special circumstances

HMRC has discretion to reduce a penalty because of special circumstances. All the guidance on special reduction for all relevant taxes is in a separate chapter at CH170000.