Penalties for Failing to Keep Tax Records and Possible Exceptions

WRA penalties for poor tax record-keeping

The Welsh Revenue Authority can charge a penalty of up to £3,000 if a taxpayer does not keep or preserve records required for Welsh taxes, including Land Transaction Tax, Landfill Disposals Tax, certain claims, and some non-notifiable land transactions. A penalty may be avoided if the facts can still be proved with other documentary evidence or if there was a reasonable excuse. The WRA must assess the penalty within 12 months of first believing there was a failure, and unpaid penalties may attract interest and be enforced like a tax debt.

• Record-keeping duties can apply to tax returns, certain claims, and some non-notifiable LTT transactions, not just notified returns.
• A failure to keep or preserve required records can itself lead to a penalty, even if there is no separate finding of underpaid tax.
• The maximum penalty is £3,000, but the WRA may decide not to charge it if other documents, such as contracts, bank records, or correspondence, prove the facts it reasonably needs.
• A taxpayer can also avoid the penalty by showing the WRA, or on appeal the tribunal, that there was a reasonable excuse for the failure.
• The WRA must notify the penalty within 12 months of when it first believed the record-keeping failure happened.
• Once charged, the penalty is usually payable within 30 days unless a review or appeal is made, and late payment can lead to interest and enforcement action.

Scroll down for the full analysis.

WRA penalties for failing to keep and preserve tax records

This page explains when the Welsh Revenue Authority can charge a penalty for poor record-keeping under the Tax Collection and Management (Wales) Act. The rule matters because record-keeping is not just an administrative formality. If required records are missing or not preserved, the penalty can be up to £3,000, and interest may run if it is not paid on time.

What this rule is about

Some Welsh tax obligations depend on the taxpayer keeping and preserving records. These records support tax returns, certain claims, and in some cases non-notifiable land transactions. If the records are not kept as the law requires, the WRA may charge a penalty.

The source material covers record-keeping failures under:

• section 38 TCMA, which applies to keeping and preserving records for making a tax return and applies to both Land Transaction Tax and Landfill Disposals Tax;
• section 38A TCMA, which applies only to non-notifiable LTT land transactions;
• section 69 TCMA, which applies to both LTT and LDT in relation to claims under sections 62, 63 or 63A TCMA;
• and certain regulations connected with reimbursement arrangements, landfill tax administration, and landfill tax record-keeping.

The legal point is simple in principle: if records that should have been kept are not available, that can itself trigger a penalty, even before considering whether any tax has been underpaid.

What the official source says

The official material says that a taxpayer who fails to keep and preserve records as required under the listed provisions is liable to a penalty of up to £3,000.

There are two important ways the penalty may be avoided:

• if the WRA is satisfied that the facts it reasonably needs to see proved could be proved by other documentary evidence that has been provided, even though the original required records were not kept or preserved; or
• if the taxpayer satisfies the WRA, or on appeal the tribunal, that there was a reasonable excuse for the failure.

The WRA must assess and notify the penalty within 12 months of the date when it first believed the taxpayer had failed to meet the record-keeping obligation.

Once the penalty notice is issued, the penalty must be paid within 30 days unless the taxpayer asks for a review or appeals to the tribunal.

If the penalty remains unpaid, the WRA charges interest from the day after the payment due date until payment is made.

The penalty is also treated as a relevant amount for enforcement. In practice, that means the WRA can use the same debt recovery and enforcement powers that it has for tax debts.

What this means in practice

The practical effect is that record-keeping is enforceable in its own right. A taxpayer cannot assume that a missing file is harmless if the transaction can be reconstructed only loosely or from memory.

At the same time, the rule is not absolute. The source recognises that there are cases where the underlying facts can still be proved by other documentary evidence. If the WRA is satisfied by that alternative evidence, a penalty may not be due.

This matters especially where:

• documents have been lost but copies exist elsewhere;
• the original records were incomplete, but bank records, contracts, correspondence, or other documents still prove the relevant facts;
• a claim has been made and the taxpayer needs to support the basis of that claim;
• a land transaction was non-notifiable, so the absence of a return does not remove the need to keep records.

The amount is stated as up to £3,000. That means the maximum is fixed by law, but the source does not set out on this page how the WRA decides the amount in any particular case.

How to analyse it

A sensible way to approach the issue is to ask these questions in order:

• Was there a legal duty to keep and preserve records under one of the listed sections or regulations?
• Which tax and which type of obligation is involved: an LTT return, an LDT return, a non-notifiable LTT transaction, or a claim under sections 62, 63 or 63A TCMA?
• What records should have existed, and were they in fact not kept or not preserved?
• Can the relevant facts still be proved by other documentary evidence?
• If not, is there a reasonable excuse for the failure?
• When did the WRA first believe there had been a failure? That date matters because the WRA has 12 months from then to assess and notify the penalty.
• If a penalty notice has been issued, has the taxpayer requested a review or appealed in time, or is the amount now due for payment within 30 days?

For many readers, the key distinction is between proving the tax position and proving compliance with the record-keeping rules. The source allows other documentary evidence to fill the evidential gap in some cases, but only if the WRA is satisfied that the facts it reasonably requires are proved.

Example

Illustration: a taxpayer makes a claim under one of the TCMA claim provisions and should have kept records supporting the claim. The original file is later lost. If the taxpayer can provide other documents that clearly establish the facts the WRA reasonably needs to see, the WRA may accept that evidence and no record-keeping penalty may arise on that basis. But if the taxpayer cannot provide records or convincing substitute documents, the WRA may assess a penalty of up to £3,000.

Why this can be difficult in practice

The main difficulty is often evidential rather than legal. The source does not say that any alternative evidence will do. The test is whether the WRA is satisfied that the relevant facts are proved by other documentary evidence. That leaves room for judgement about:

• what facts the WRA reasonably requires to be proved;
• whether the substitute documents are reliable and complete enough;
• whether the failure was really a failure to keep records, a failure to preserve them, or both;
• whether there was a reasonable excuse.

The phrase reasonable excuse is also fact-sensitive. The source confirms that it can defeat the penalty, but it does not define it on this page. That means outcomes may depend heavily on the circumstances and the evidence available.

Another practical issue is timing. The WRA has 12 months from the date it first believed there had been a failure. In some cases, there may be disagreement about when that belief was first formed.

Key takeaways

• Failing to keep and preserve required records for LTT, LDT, certain claims, or specified regulations can lead to a penalty of up to £3,000.
• No penalty should arise if the WRA is satisfied that the missing facts are proved by other documentary evidence, or if the taxpayer has a reasonable excuse.
• The WRA must assess the penalty within 12 months of first believing there was a failure, and unpaid penalties can attract interest and be enforced like tax debts.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Penalties for Failing to Keep Tax Records and Possible Exceptions

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