Tax Penalties for Non-Compliance with WRA Investigations and Information Notices

WRA penalties for not complying with information notices or obstructing inspections

If a taxpayer does not comply with a Welsh Revenue Authority information notice, or deliberately obstructs an inspection, the WRA can charge penalties. These usually start with a fixed £300 penalty, may increase with daily penalties if the failure continues, and in serious cases can lead to a further tribunal penalty linked to the tax at risk.

• A fixed penalty of £300 can apply for failing to comply with an information notice or for deliberate obstruction during an inspection or tribunal-approved action.
• If the failure continues after the fixed penalty, daily penalties of up to £60 can be charged; for unidentified third party notices, the tribunal can allow a higher daily amount up to £1,000.
• The Upper Tribunal may impose an extra penalty if the WRA believes the continued failure or obstruction means significantly less tax is being, or is likely to be, paid.
• No fixed or daily penalty is due if the taxpayer had a reasonable excuse, or if they complied within extra time allowed by the WRA.
• The WRA must usually assess fixed and daily penalties within 12 months, and penalties are normally payable within 30 days unless a review or appeal delays payment.

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WRA investigation penalties for failing to comply with an information notice or obstructing an inspection

This page explains the penalties that can arise during a Welsh Revenue Authority investigation if a taxpayer does not comply with an information notice or deliberately obstructs the WRA. These penalties matter because they can start with a fixed amount, build up day by day, and in serious cases lead to a further penalty set by the tribunal by reference to the tax at stake.

What this rule is about

The source material deals with penalties connected with WRA investigatory powers under the Tax Collection and Management (Wales) Act. These are not penalties for getting a tax return wrong. They are penalties for failing to cooperate with a formal information-gathering or inspection process.

In broad terms, the rules apply where a taxpayer:

• does not comply with an information notice, or
• deliberately obstructs the WRA, or someone authorised by the WRA, during an inspection or when a tribunal-approved power is being exercised.

The legislation distinguishes between an initial fixed penalty, daily default penalties if the problem continues, and in some cases an additional tribunal-imposed penalty where the continued failure or obstruction risks a significant loss of tax.

What the official source says

The official material says that a taxpayer is liable to a fixed penalty of £300 if they fail to comply with an information notice or deliberately obstruct the WRA in the circumstances described.

If the failure or obstruction continues after that first £300 penalty is imposed, the taxpayer can face a further penalty of up to £60 for each additional day the failure or obstruction continues.

For an unidentified third party notice, the daily penalty can be increased, but only in a more controlled way. The increased daily penalty is only available if:

• the failure continues for more than 30 days from the date of the penalty notice,
• the recipient has been told that an application for an increased penalty will be made, and
• the tribunal agrees that an increased penalty may be imposed.

When deciding the amount, the tribunal must consider relevant factors, including the cost to the recipient of complying. The tribunal cannot set an increased daily amount above £1,000 per day.

The source also says that, instead of or in addition to the fixed and daily penalties, there may be an additional penalty determined by the Upper Tribunal. This applies where the WRA has reason to believe that the continued failure or obstruction means the amount of tax paid, or likely to be paid, is significantly less than it would otherwise have been. In a tax credit case, the same approach applies by reference to the amount paid or likely to be paid in respect of the credit.

In setting that additional penalty, the Upper Tribunal must have regard to the amount of unpaid tax or unpaid amount relating to the tax credit. The additional penalty must be imposed within 12 months of the latest of certain trigger dates, including the initial £300 penalty notice and the end or outcome of any appeal against the information notice.

The source also identifies situations where the taxpayer is not liable to the £300 fixed penalty or the up to £60 daily penalty. These are where:

• the taxpayer satisfies the WRA, or on appeal the tribunal, that there was a reasonable excuse for the failure or obstruction, or
• the taxpayer missed a time limit but did what was required within further time allowed by the WRA.

The WRA must assess and notify the taxpayer of liability to the fixed or daily penalties within 12 months of the date on which liability first arose.

Once assessed, the penalty is generally payable within 30 days of the notice of assessment. If the taxpayer asks for a review or appeals, payment is deferred until 30 days after the review or appeal is finally resolved against the taxpayer or the appeal is withdrawn. Interest runs on unpaid penalties from the day after the due date until payment.

What this means in practice

The practical message is simple: once a valid information notice has been issued, or a lawful inspection is under way, non-compliance can become expensive quite quickly.

The first issue is whether there has actually been a failure to comply, or deliberate obstruction. Not every disagreement with the WRA is obstruction. The source specifically refers to deliberate obstruction, which suggests a conscious act of blocking the inspection or exercise of powers, rather than mere confusion or delay.

Once the initial £300 penalty is imposed, the risk is no longer only about a one-off charge. If the taxpayer still does not comply, daily penalties may follow. That means delay can itself create further liability even if nothing new happens.

In more serious cases, the consequences can go beyond standard default penalties. If the WRA believes the continued non-compliance is materially reducing the tax that would otherwise be paid, it can seek an additional penalty from the Upper Tribunal. That moves the issue from a routine compliance failure into something potentially much more serious.

The time limits also matter. The WRA does not have an unlimited period to assess the fixed and daily penalties. It must do so within 12 months of the date liability first arose. But for the additional Upper Tribunal penalty, the relevant 12-month period runs from the latest of the dates listed in the source, including appeal-related dates.

The reasonable excuse protection is important, but it is not automatic. The taxpayer must satisfy the WRA, or the tribunal on appeal, that there was a reasonable excuse. The source does not define what counts as reasonable excuse, so that will depend on the facts.

How to analyse it

If you are trying to work out whether these penalties may apply, the most useful approach is to ask the following questions in order:

• Was there a valid information notice, inspection, or tribunal-approved exercise of powers?
• What exactly was the taxpayer required to do?
• Did the taxpayer fail to do it, or did they deliberately obstruct the WRA?
• If there was a failure, did it continue after the initial £300 penalty was imposed?
• Is the case an unidentified third party notice, so that an increased daily penalty might be relevant?
• Has the WRA followed the procedural steps needed for any increased daily penalty, including notice to the recipient and a tribunal application?
• Is there a reasonable excuse, or did the WRA allow further time and was the requirement met within that extended period?
• Has the WRA assessed the fixed or daily penalties within the statutory 12-month limit?
• Is the WRA alleging that continued non-compliance has significantly reduced the tax that has been paid or is likely to be paid, so that an additional Upper Tribunal penalty may be sought?

This framework matters because penalty disputes often turn less on broad principle and more on sequence, timing, and evidence. For example, it may be clear that documents were not produced, but less clear whether the notice was complied with in substance, whether extra time had been granted, or whether the conduct amounted to deliberate obstruction.

Example

Illustration: the WRA issues an information notice requiring a taxpayer to provide specified documents by a stated date. The taxpayer does not provide them and does not obtain extra time from the WRA. The WRA imposes a £300 fixed penalty. If the taxpayer still does not comply after that, the WRA may assess daily penalties of up to £60 per day while the failure continues.

If, however, the taxpayer shows that there was a reasonable excuse for the failure, or the WRA had agreed a later deadline and the documents were provided within that extended period, the fixed and daily penalties would not arise on the basis described in the source.

In a more serious version of the same scenario, if the WRA has reason to believe that the continuing non-compliance means substantially less tax is being paid than would otherwise be due, it may seek an additional penalty from the Upper Tribunal.

Why this can be difficult in practice

Several parts of this area are fact-sensitive.

First, whether there has been a failure to comply may not always be straightforward. A taxpayer may provide some information but not all of it, or may dispute whether the notice required a particular document. That can affect whether there is a continuing failure and when it started.

Second, deliberate obstruction is a stronger concept than simple lack of cooperation. The source does not spell out where the line is drawn, so the facts and evidence will matter.

Third, reasonable excuse is often contentious. The source confirms that it is a defence to the fixed and daily penalties, but it does not set out a full test. That means outcomes may depend heavily on the explanation given and the supporting evidence.

Fourth, the additional Upper Tribunal penalty depends on the WRA having reason to believe that the continued failure or obstruction has led, or is likely to lead, to significantly less tax being paid. Terms such as significantly less are evaluative. They suggest a threshold of seriousness, but the source does not define it numerically.

Finally, procedure matters. Increased daily penalties for unidentified third party notices require specific steps and tribunal involvement. If those steps are not followed, the increased amount should not be imposed simply because the WRA wants stronger sanctions.

Key takeaways

• A failure to comply with a WRA information notice, or deliberate obstruction of an inspection, can trigger an immediate £300 penalty.
• If the problem continues, daily penalties can follow, and in some cases the tribunal can authorise much higher daily amounts or an additional penalty linked to the unpaid tax.
• Reasonable excuse, extra time allowed by the WRA, statutory time limits, and correct procedure can all be critical in deciding whether a penalty is valid.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Tax Penalties for Non-Compliance with WRA Investigations and Information Notices

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