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HMRC internal manual

Compliance Handbook

Offshore matters: penalties for enablers of offshore tax evasion or non-compliance: calculating the penalty: special reduction

Penalties for enablers of offshore tax evasion or non-compliance can be reduced because of special circumstances. This is called a special reduction and allows

  • the staying of a penalty
  • agreeing a compromise in relation to proceedings for a penalty.

Staying a penalty means stopping or postponing enforcement of a penalty. Agreeing a compromise allows us to forego all or part of a penalty.

Special reduction must be considered if there is liability to a penalty and the amount of the penalty has been established.

To make a special reduction, there must be special circumstances. Special circumstances are either

  • uncommon or exceptional, or
  • where the strict application of the penalty legislation produces a result that is contrary to the interests of natural justice and common sense.

Uncommon or exceptional circumstances should be identifiable as such and will not include factors already taken into account in establishing the penalty or the quality of disclosure.

Special circumstances does not include

  • ability to pay, or
  • offsetting an overpayment by another person.


(This content has been withheld because of exemptions in the Freedom of Information Act 2000)