COM101140 - Penalties: penalty determinations: superseded accounting periods
Source: gov.uk (2025-10-15)


This subject is presented as follows

General (#IDADE5PG)Return period that is not an Accounting Period (AP (#IDAWE5PG))Superseded and superseding Accounting Periods (APs) sharing a common specified period (#IDAEK5PG)Superseded and superseding Accounting Periods (APs) not sharing a common specified period (#IDAGQ5PG)

General

It is important to note that COTAX handles penalties on superseded Accounting Periods (APs) in a different way to tax, as the penalty relates to the specified period, not the Accounting Period (AP).

The following examples are not intended to cover every set of circumstances which may arise.(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

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Return period that is not an Accounting Period (AP)

COTAX only charges a penalty for a return period that is also an AP of the company.

When you supersede an AP where a penalty has already been charged, by a period during which the company is outside the charge to CT, you should discharge the penalty on appeal.

Example

Date

Event

20/01/2023

A notice to deliver is issued specifying the period 01/01/2022 to 31/12/2022.

16/01/2024

COTAX charges and issues the first Flat-rate (F1) penalty automatically.

16/04/2024

COTAX charges and issues the second Flat-rate (F2) penalty automatically.

01/07/2024

18 months after AP ended 31/12/2022, COTAX puts it on work list DRNR (Determination Required No Return).

07/07/2024

Subsequently the caseworker raises a Revenue Determination using function RAMA (Record/Amend Assessment).

21/07/2024

14 days later COTAX charges the first tax related (TR1) penalty automatically.

01/09/2024

The company tells us it was dormant throughout 2022. The caseworker uses function RAMA to reduce the revenue determination to nil, then function MAPD (Maintain AP Dates) to make the AP dormant. The tax related penalty is automatically reduced to nil when the revenue determination is amended, and the F1 and F2 penalties are automatically reduced to nil when the AP is made dormant.

If you have received an appeal against the penalties, an entry on work list PENR (Penalties Requiring Review) shows the caseworker that they need to use function PPEN (Prepare Penalty Determination) to reduce the flat rate penalties to nil. Although the company was strictly still liable to make a return for the specified period, the caseworker normally discharges the penalties on appeal when informed the company was dormant.

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Superseded and superseding Accounting Periods (APs) sharing a common specified period

When an Acccounting Period (AP) is superseded, COTAX may have recorded apparent liability to a late filing penalty for the superseded AP and penalties may already have been determined.

COTAX cannot automatically handle the penalty implications of superseded and superseding APs. If an AP is superseded and a penalty determination has been made on it, COTAX lists the case for manual review on:
- EFRL (E-Filed Return List), if the AP structure is superseded as a result of online filing
- PENR (Penalties Requiring Review), if the AP structure is changed manually with LRTN (Log Return) or MAPD (Maintain AP Dates).
Where penalty determinations have been issued, COTAX sets the inhibit penalty indicator (INH) on any superseding AP with an end date falling into the same specified period as a superseded AP with a charged penalty determination. This is to prevent an incorrect double charge to late filing penalties.

Example

E Ltd regularly made up its accounts to 31 March and receives a notice to deliver specifying the period 01/04/2022 to 31/03/2023.

Date

Event

31/03/2024

Return not delivered.

01/04/2024

COTAX records the first flat rate (F1) penalty occurrence.

16/04/2024

COTAX issues the first flat rate (F1) penalty automatically.

30/04/2024

E Ltd files a return, accounts and computations online for the 11 month period ended 28/02/2023, having changed its AP to the last day of February.

COTAX sets the inhibit signal for the superseding AP to prevent any penalty determination being issued and lists the case on EFRL with a reason of ‘AP changed’.

Subject to any question of a reasonable excuse for the delay, the penalty incurred for the specified period is £100.

The already charged penalty for the superseded AP is regarded as available to cover any penalty due in respect of the superseding AP falling in the same specified period.

Please note that:
- When a company fails to deliver its return by the filing date for three or more successive APs requiring returns, it is liable to increased flat-rate penalties of £500 and £1000. COTAX checks previous live APs to determine whether the increased rate applies. It does not recognise that the increased rate should apply where a previous penalty determination is present on a superseded AP. In these circumstances you should:​
- unset the inhibit signal on the superseding AP
- reduce the determination on the superseded AP to nil
- raise a fresh determination on the superseding AP using PPEN (Prepare Penalty Determination)
- Where a penalty determination has not been issued on the superseded AP, COTAX does not allow access to the superseded AP but automatically deals with penalties arising on the superseding AP.
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Superseded and superseding Accounting Periods (APs) not sharing a common specified period

Example

Date

Event

16/03/2023

F Ltd incorporated.

01/05/2023

Form CT41G or OTRS notification received advising business commenced 16/03/2023 and that company will draw up accounts to 31/12/2023.

22/05/2023

Date of commencement and future accounting date entered on company’s COTAX record.

20/01/2024

Notice to deliver served specifying the period 16/03/2023 to 31/12/2023.

31/12/2024

Filing date for Accounting Period (AP) ended 31/12/2023.

16/01/2025

COTAX issues first flat-rate penalty as no return received for AP ended 31/12/2023.

21/01/2025

Notice to deliver served specifying the period 01/01/2024 to 31/12/2024.

12/02/2025

Company appeals penalty determination for the period 16/03/2023 to 31/12/2023 on the grounds that it was not required to deliver any return for the period specified in the notice.

Please note that

Contrary to the CT41G or OTRS notification, the company draws up its first accounts for the period 16/03/2022 to 31/03/2023 - to “the last day of the month in which the anniversary of its incorporation falls” under the normal Companies Act rule. (See section 391(2)(b)(ii) CA 2006).

05/04/2025

Company changes its APs online and delivers two returns for the periods 16/03/2021 to 15/03/2022 and 16/03/2022 to 31/03/2023 which are logged, captured and the self assessment recorded automatically.

06/04/2025

The case appears on EFRL with a reason ‘AP changed’.

22/04/2025

COTAX issues first flat-rate penalty for APs ended 15/03/2024 and 31/03/2024 as both were received after their common filing date of 31/03/2025. (See pararaph 14(1)(b) Sch 18 Finance Act 1998).

COTAX does not set the inhibit penalty indicator (INH) on either superseding AP as neither share a common specified period with the superseded AP which has a charged penalty determination. COTAX therefore penalises the company for its:
- failure to file returns for APs 16/03/2021 to 15/03/2022 and 16/03/2022 to 31/03/2022 by the filing date, and
- apparent failure to file a return for specified period 16/03/2022 to 31/12/2022.
As there was no AP ending in or at the end of the specified period 16/03/2022 to 31/12/2022, no return is due and you should use PPEN (Prepare Penalty Determination) to reduce the penalty determination on the superseded AP to nil.

See:
- COM101081 (https://www.gov.uk/hmrc-internal-manuals/cotax-manual/com101081) for a list of forms relevant to this subject
- COM101031 (https://www.gov.uk/hmrc-internal-manuals/cotax-manual/com101031) for a list of functions to use in particular situations
- COM101011 (https://www.gov.uk/hmrc-internal-manuals/cotax-manual/com101011) for legislation applying to this subject