Notice

Excise Notice 209: civil penalties - fixed, geared and daily

Published 14 April 2014

Foreword

This notice cancels and replaces Notice 209 (August 2010).

1. Introduction

1.1 What this notice is about

This notice covers excise civil penalties under the Finance Act 1994.

It does not cover excise penalties for failure to notify, VAT and Excise wrongdoing under Schedule 41 Finance Act 2008 or inaccuracy penalties under Schedule 24 Finance Act 2007.

Information about Schedule 41 failure to notify, VAT and Excise wrongdoing penalties and Schedule 24 inaccuracy penalties and can be found in our factsheets, CC/FS11, CC/FS12 and CC/FS7. You can find these at Compliance checks factsheets.

Penalties for failure to notify and VAT and Excise wrongdoing apply where the obligation to notify or the wrongdoing arises on or after 1 April 2010.

Penalties for inaccuracies apply to returns or documents for tax periods starting on or after 1 April 2009 with a due date on or after 1 April 2010.

1.2 What are excise civil penalties

The 1994 Finance Act removed from excise criminal law a number of ‘offences’ which we had previously been able to prosecute through the courts. The ‘offences’ removed from criminal law were those which sought to penalise regulatory breaches or failures in the duty of care. In their place the act provided for a series of civil penalties that may be imposed when these breaches or failures occur, without reference to the courts.

These penalties are designed to encourage compliance with legal obligations.

1.3 What are the types of penalties

The 4 types of penalties are:

• fixed penalty - which consists of a fixed sum of money, chargeable for breaches of certain regulations
• geared penalty - which consists of a set percentage of the duty involved subject to a minimum amount
• daily penalty - which consists of a fixed sum of money chargeable for each day certain breaches continue. This daily penalty may only be imposed if either of the previous penalties have already been issued for the same breach
• breach of Walking Possession Agreement (Northern Ireland) - which consists of a set percentage of the duty or penalty that gave rise to distraint action. In England and Wales, should a Controlled Goods Agreement be breached, a fine and/or imprisonment up to 51 weeks is possible, following conviction. This fine/imprisonment is issued by the courts following conviction, not by HM Revenue and Customs (HMRC)

These penalties do not imply any dishonesty or intention to evade tax or duty.

You can find further information about the separate penalty for conduct involving dishonesty in Notice 160: compliance checks into indirect tax matters.

1.4 Which law covers this notice

This notice does not have force of law but it explains how we interpret the relevant sections of the Finance Act 1994:

• sections 9, 10, 11 and 13
• schedule 4

2. Calculating and notifying penalties

2.1 When we may issue you with a penalty

2.1.1 A fixed penalty

We may issue you with a fixed penalty for:

• failure to notify a liability to be approved, registered or licensed; unlawful dealing, possession, manufacture, production, treatment etc of excise goods or knowledge of such operations, illegal betting or gaming
• failure to notify a material change in the business, for example legal entity, address, ceasing to produce or deal in excise goods
• failure to keep or produce records or make them available for inspection, copying etc when asked to do so
• failure to preserve records for 6 years or other authorised period
• breaches in the duty of care, for example failure to notify prescribed activities or occurrences, breaches of conditions, misuse of excise products, surpluses and deficiencies
• failure to submit duty returns by the due date

2.1.2 A geared penalty

We may issue you with a geared penalty for:

• failure to pay duty or assessments of duty

2.1.3 A daily penalty

We may issue you with a daily penalty for:

• failure to keep or produce records or make them available for inspection, copying etc when asked to do so
• failure to submit duty returns by the due date
• failure to pay duty or assessments of duty

We will only issue you with a daily penalty after we have issued you with a fixed or geared penalty for the same circumstances.

2.1.4 A penalty for breach of walking possession agreement

We may issue you with a penalty for breach of walking possession agreement for:

• the removal of goods on which distraint has been levied and a walking possession agreement entered into (Northern Ireland only)

2.2 How much to pay for a penalty

Penalties are charged at the following rates:

A…	Is charged at…
fixed penalty	£250 for each breach
geared penalty	5% of the duty involved, or £250, whichever is the greater
daily penalty	£20 per day for each day the breach continues
penalty for breach of a Walking Possession Agreement (Northern Ireland)	50% of the duty or penalty that gave rise to distraint action

The rate of these penalties cannot be varied.

2.3 How we will tell you about a penalty

We will notify you or your representative of the penalty on form EX 601, which will be accompanied by a remittance advice showing the address to which you should make your payment. You should include this remittance advice with your payment.

In more complex circumstances, we may also send:

• an explanatory letter, in support of the penalty
• a schedule outlining the detail of the penalty

and they should be read together.

3. ‘Reasonable excuse’

3.1 What we mean by reasonable excuse

If we, or the independent tribunal, agree there is a reasonable excuse for a breach of regulations, you will not be liable to a penalty.

There is no legal definition of what constitutes a reasonable excuse but we will look closely at the circumstances of each case and the conduct that led to the breach.

If you can show that your conduct was that of a conscientious businessperson who accepted the need to comply with the legal requirements, then there may be a reasonable excuse.

3.2 What is considered a reasonable excuse

The following guidelines show circumstances where there might be a reasonable excuse for failing to comply with your obligations as an excise trader:

• compassionate circumstances: where you are totally responsible for running a small business and you or a member of your immediate family was seriously ill or recovering from such an illness
• computer breakdown: where the records essential for completion of your duty return are held on computer and it breaks down, either just before or during the preparation of your return. You must have taken reasonable steps to correct the fault
• illness: where the person normally responsible for completing the duty return is unable to do so because of illness. You will need to show that there was no one else capable of completing the return. If it is a prolonged illness, you will need to show that you have taken reasonable steps to get someone else to do the return
• loss of key personnel: where the person responsible for completing your duty return leaves the job at short notice and there is no one else to complete the return on time for that period
• loss of records: where your records are stolen or destroyed preventing you from submitting your duty return. This excuse applies only to your current return period. If you have also lost records that relate to a future duty return, you must tell your local Excise Business Advice Centre immediately. If your records are elsewhere, for example with your accountant or HMRC, it is your responsibility to get them back (or ask for copies) in time to complete and send in your return

Your claim of reasonable excuse will not necessarily be accepted just because it fits into one of these categories. Any decision to accept reasonable excuse will be based on all the circumstances of your individual case.

3.3 What is not considered a reasonable excuse

Genuine mistakes, honesty and acting in good faith are not accepted as reasonable excuses for penalty purposes. And the law provides specifically that you do not have a reasonable excuse if you:

• cannot afford to pay
• relied on some other person to perform any task for you

4. Reviews and appeals

4.1 If you disagree with our decision

If you disagree with our decision to issue a penalty, write to us, with your reasons, within 30 days of our decision. There are 3 main options:

• if you have more information or you think we have missed something, tell the person who issued the decision
• you can have your case reviewed by a different officer from the one who made the decision. If you opt to have your case reviewed, you will still be able to appeal to the tribunal if you disagree with the outcome. If you want a review, you need to write to us within 30 days of the date of the decision
• you can appeal direct to the independent tribunal within 30 days of our decision

You do not have to write to us yourself. An accountant or advisor can do this on your behalf provided you have let us know that you authorise them to act on your behalf.

You can find more information about appeals and reviews and how to authorise an accountant or adviser to act on your behalf at Disagree with a tax decision, or contact the Excise Enquiries Helpline. You can find out more about tribunals on the HM Courts and Tribunals Service website.

5. Seizure and restoration

5.1 Civil penalties are not affected by the use of seizure and restoration

Our power to seize goods involved in a breach are not affected by the civil penalties. Goods include:

• vehicles
• vessels
• gaming machines

For certain breaches, it is our policy not to return seized goods, and we may, as well as seizure, issue civil penalties in these cases. We may offer to return goods on payment of a sum determined by us in a process known as restoration.

Our decision to seize goods can only be challenged through the courts. You may appeal against our refusal to restore or the terms of restoration to the independent tribunal.

You can find more information on seizure and restoration in Notice 12A: what you can do if things are seized by HMRC.

6. Your rights and obligations

Your Charter explains what you can expect from us and what we expect from you. For more information, go to Your Charter.

7. Comments and suggestions

If you have comments or suggestions to make about this notice, write to:

HM Revenue and Customs
Tax Administration Advice
Central Policy
8th Floor Imperial Court
2/24 Exchange Street East
Liverpool
L2 3PQ

This address is not for general enquiries.

For general enquiries, contact the Excise Enquiries Helpline.

8. Putting things right

If you are unhappy with our service, contact the person or office you have been dealing with. They will try to put things right. If you are still unhappy, they will tell you how to complain.

Find out more about making a complaint.

9. How we use your information

HMRC is a Data Controller under the Data Protection Act 1998. We hold information for the purposes specified in our notification to the Information Commissioner, including the assessment and collection of tax and duties, the payment of benefits and the prevention and detection of crime, and may use this information for any of them.

We may get information about you from others, or we may give information to them. If we do, it will only be as the law permits to:

• check the accuracy of information
• prevent or detect crime
• protect public funds

We may check information we receive about you with what is already in our records. This can include information provided by you, as well as by others, such as other government departments or agencies and overseas tax and customs authorities. We will not give information to anyone outside HMRC unless the law permits us to do so.

For more information go to Data protection.