A4.594A Determination of penalties—pre-harmonised regime

Administration and compliance

A4.594A Determination of penalties—pre-harmonised regime

A4.594A Determination of penalties—pre-harmonised regime

HMRC determination of penalties under the pre-harmonised regime

In the great majority of cases where an enquiry into a taxpayer's return shows that income or gains have been understated, the HMRC officer will negotiate a settlement. The officer will explain the statutory provisions regarding their authority to impose (and to mitigate) penalties and will invite the taxpayer to offer to make a payment to include underpaid tax, interest and mitigated penalties. If such an offer is made, no formal penalty proceedings will be taken; see A4.597.

All penalties under the Taxes Acts are determined by an authorised HMRC officer1 with the following exceptions2:


    •     where penalty proceedings for fraud have been commenced before the court3


    •     continuing daily penalties for failure to deliver a return for income tax and capital gains tax4


    •     an initial penalty (but not continuing penalties) for failure to submit special returns or to supply documents or information5


    •     an initial penalty on a promoter of a tax avoidance scheme for failing to notify the scheme to HMRC6

HMRC may issue penalties relating to returns from employment intermediaries7 from 6 April 20158.

Notice of the determination of a penalty by a HMRC officer must be served on the person liable to it, stating the date of the determination and the time within which an appeal may be made9; the form of the notice is prescribed by the Board10. Once the authorised officer has decided to impose a penalty and determined the amount of it,

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