Commentary

A4.567E Harmonised penalties: common concepts—suspension

Administration and compliance

A4.567E Harmonised penalties: common concepts—suspension

A4.567E Harmonised penalties: common concepts—suspension

HMRC has power to suspend either:

  1.  

    •     a penalty for inaccuracy in a document (see A4.530), or

  2.  

    •     a late payment penalty (see A4.560)

The mechanics of suspension operate differently for each of these penalties as below. There is no provision for suspension of penalties relating to failure to notify liability or late filing.

Inaccuracy in documents

HMRC has power to suspend, for up to two years, all or part of a penalty for careless inaccuracy, ie where there has been a failure to take reasonable care1. There is no provision for suspension where the inaccuracy was brought about deliberately. A suspended penalty can subsequently be cancelled or become payable.

The suspension must be subject to one or more conditions designed to help the taxpayer avoid becoming liable for further penalties for careless inaccuracies2.

To effect the suspension HMRC must serve a notice on the taxpayer giving all the following details3:

  1.  

    •     what part of the penalty is suspended

  2.  

    •     the suspension period

  3.  

    •     the conditions attached to it

A condition of suspension may specify action to be taken and a period within which it must be taken4. One of the conditions of suspension might be that the person must pay all tax due at the appropriate times during the period of suspension (though HMRC officers are not instructed to make this a generic condition of suspension5). In the event that the person subsequently meets cash flow difficulties, they will be treated as having satisfied the condition provided that

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