Legislation – Finance Act 2026

(a)

state the failure (or failures) in respect of which the penalty point is awarded, and

(b)

include sufficient information for the person to be able to identify the group of returns for which the penalty point is awarded.”

(3)

After paragraph 6 insert—

“Cancellation of individual penalty points

6A

(1)

HMRC may cancel a penalty point awarded under paragraph 6.

(2)

Where HMRC cancel a penalty point after a notice under paragraph 6(2) in respect of the penalty point is given, they must notify the person and, in the notice—

(a)

state the failure (or failures) in respect of which the penalty point was awarded, and

(b)

include sufficient information for the person to be able to identify the group of returns for which the penalty point was awarded.

(3)

Where HMRC cancel a penalty point before a notice under paragraph 6(2) in respect of the penalty point is given, HMRC is not required to give the notice under paragraph 6(2).

(4)

Where HMRC cancel a penalty point, any assessment of a penalty under this Schedule for which the person is liable by virtue of the penalty point ceases to have effect (and is to be taken as never having had any effect).

(5)

The cancellation of a penalty point does not prevent HMRC from subsequently awarding a penalty point for the failure (or failures) in respect of which the cancelled penalty point was awarded.

(6)

Sub-paragraph (7) applies if—

(a)

HMRC cancel a penalty point,

(b)

after that penalty point was given by HMRC and before it was cancelled, the person failed to make a return on or before the due date, and

(c)

at the time the failure occurred, the person already had the maximum number of penalty points for the group of returns to which that return belongs (see paragraph 5(8)).

(7)

HMRC may award a penalty point in respect of the failure before the end of the period of 12 months beginning with the day after HMRC cancel the penalty point (and paragraph 6(3) does not apply).”

(4)

In paragraph 8 (expiry of all penalty points for a group of returns)—

(a)

in sub-paragraph (1)—

(i)

the words from “at the beginning” to the end become paragraph (a);

(ii)

after that paragraph insert “, or

(b)

if HMRC notify the person before that time that HMRC have decided the points should expire, at the beginning of the day specified in the notice (which may be before the day on which the notice is given).”;

(b)

in sub-paragraph (6) for “this paragraph” substitute “paragraph (1)(a)”;

(c)

after sub-paragraph (6) insert—

“(7)

For the purposes of this paragraph, where—

(a)

a person fails to make a return, and

(b)

by virtue of paragraph 19(1) (reasonable excuse) no liability to a penalty point or penalty in respect of the failure arises under this Schedule,

the person is to be treated as if they made the return on or before the due date.”

(5)

After paragraph 16 insert—

“Withdrawal of assessments

16A

(1)

This paragraph applies where HMRC have assessed a penalty for which a person is liable under this Schedule in respect of a failure (or failures) to make a return.

(2)

HMRC may withdraw the assessment by notice to the person.

(3)

The withdrawn assessment ceases to have effect (and is to be taken as never having had any effect).

(4)

But the withdrawal of the assessment does not prevent HMRC from subsequently assessing a penalty for the failure (or failures) mentioned in sub-paragraph (1).”

(6)

In paragraph 24, in sub-paragraph (4)—

(a)

in paragraph (a)(ii), omit “, for a group of returns,”;

(b)

in paragraph (b), omit “in the same group”;

(c)

in paragraph (c), for “that group of returns” substitute “the group of returns to which that return belongs”.

(7)

For the purposes for which Schedule 24 to FA 2021 is in force immediately before 1 April 2026—

(a)

the amendment made by subsection (4)(c) is treated as always having been in force, and

(b)

the other amendments made by this section come into force on 1 April 2026.

(8)

For the purposes for which the amendments made by this section come into force by virtue of subsection (7)—

(a)

the amendments made by subsections (2), (3) and (6) have effect in relation to penalty points awarded on or after 1 April 2026;

(b)

the amendments made by subsection (4)(a) and (b) have effect in relation to penalty points whenever awarded;

(c)

the amendment made by subsection (5) has effect in relation to penalties assessed on or after 1 April 2026.

(9)

The amendments made by this section come into force for any other purposes at the same time as Schedule 24 to FA 2021 comes into force for those other purposes.