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I seem to have fallen into the trap of believing some of HMRC's website statements to taxpayers about tax return penalties, and in my article Can I have a date? I mentioned that 'practitioners should, of course, note that the £100 penalty for the late submission of paper partnership and trust tax returns is not mitigable'.
My apologies.
Although the partnership tax return late filing penalty is fixed at £100, the trust tax return is capped at the liability (if lower) in the same way as individual tax returns.
This is confirmed by HMRC's Self Assessment online filing update for agents — 20 November 2008, where 'What about capping of penalties?' states that 'the capping provision will continue to apply this year to returns for individuals and trusts. This means any penalty charged would be the lesser of £100 or the tax due and remaining unpaid as at 31 January'.
