A4.569 Validity of a penalty notice

Administration and compliance

A4.569 Validity of a penalty notice

Penalties—validity of charge

A4.569 Validity of a penalty notice

In penalty cases, it is first for HMRC to prove, on a balance of probabilities basis, that a penalty has been validly assessed (see also A4.590 regarding burden of proof).

For example, the First-tier Tribunal noted in the case of Hansard1:

'… the burden of proof was clearly on HMRC to show that the penalties were duly incurred and that from the bundle of papers supplied by HMRC we could ask questions of HMRC.'

The decision goes on to say (paragraph 37):

'The penalties may only be cancelled, assuming they are procedurally correct, if the appellant had a reasonable excuse for the failure to deliver the return or make the payment by or before the due date or penalty date and they may only be reduced if HMRC's decision as to whether there are special circumstances was flawed and the Tribunal makes such a reduction.'

Even if the appellant does not question the validity of the notice, the Tribunal will consider it before going on to look at the existence of a reasonable excuse (A4.568). This is because the question of whether or not a reasonable excuse exists may be irrelevant if the penalty was not validly assessed. In Halfaoui2, the Tribunal noted:

'As this is a penalty appeal, the burden of proof is on HMRC. It is therefore for HMRC to prove that a Notice was provided to Mr Halfaoui specifying the date from which the daily penalty was payable. This would be the case,

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