A4.588 Tax agents—dishonest conduct: penalties
HMRC has powers, which apply across all taxes, to take action against tax agents they determine as having engaged in dishonest conduct1. HMRC is able to impose a civil penalty on dishonest tax agents and to access their working papers to determine the extent of their dishonesty. Penalties can also be imposed for failure to comply with a file access notice requiring production of documents.
The rules have effect for dishonest conduct on and after 1 April 2013. As noted at A4.587, the previous law, principally TMA 1970, ss 20A and 99, has been repealed2.
For further commentary on these powers, see A6.321–A6.323.
Steps for raising of penalty
The raising of a penalty involves a two-stage process:
(a) firstly, HMRC serves a 'conduct notice' setting out the allegedly dishonest conduct in question3. If the allegation is contested, the First-tier Tribunal will consider whether HMRC has proved its case
(b) the second stage is the quantification and assessment of the penalty, which happens only if, at the first stage, the Tribunal rules in favour of HMRC or the allegation is not contested4
A person who fails to comply with a notice is liable to an initial fixed penalty of £300. Failure to comply includes not only not providing a required document, but also concealing, destroying or otherwise disposing of a required document, or arranging for this to be done5. If the failure continues beyond the date of issue of a fixed
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