I think the max penalty is in the order of 4,000. The administrative costs of the process that generates the penalty and enforcing it probably doesn't justify doing it. As an example, below is an extract from the Collection Manual as published on the Revenue website:
"Dedicated Enforcement Unit (DEU) also manages the civil penalty process for late or non-filing of P35 or VAT3 returns. When a penalty is imposed on a customer, DEU issues a Penalty Notice initially, i.e. a final request for payment of the penalty. Copies of the Penalty Notices for PAYE/PRSI and VAT are at Appendix 5 and Appendix 6.
In the absence of any agreement that the taxpayer is liable to the penalty or following failure by a taxpayer to pay an ‘agreed’ penalty, DEU, if still of the opinion that the taxpayer is liable to a penalty, will issue a written notice of that opinion to the taxpayer (and agent) in the form of a Notice of Opinion.
The Notice of Opinion will include details of –
(a) the provisions under which the penalty arises,
(b) the circumstances in which that person is liable to the penalty,
(c) the amount of the penalty to which that person is liable; and
(d) such other details, as the DEU considers necessary.
There is an agreement phase for both notices, - 21 days for the Penalty Notice and 30 days for the Notice of Opinion, to allow for agreement and payment of the penalty or an appeal against the penalty."
So the CG staff have to issue a penalty notice, which the taxpayer can appeal, and this appeal can take up a lot of time for those staff as it's a very formal process.
Then, the taxpayer having lost their appeal to the penalty notice and if still refusing to pay the penalty, the CG staff must issue a notice of opinion to the taxpayer, which is quite a formal legal document. Then the taxpayer can appeal against this as well, which involves a trip to the Circuit Court AFAIK.
And at the end of that, even if, as is likely, the judge finds in favour of Revenue, he may decide that the appropriate penalty is less than the 4,000 max. But even the full 4,000 wouldn't make all of those man-hours worthwhile...
So I suppose the simple answer to your question is that Revenue probably take a cost / benefit view of this issue and have decided their increasingly finite resources can be more efficiently employed elsewhere, for now. Of course that could change at any time, and they might decide to do a compliance drive, including greater enforcement of P35 penalties.