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HMRC internal manual

Compliance Handbook

Special reduction: What are special circumstances

We can only make a special reduction where there are special circumstances. You must not give a special reduction without authority from TAA to do so, see CH175000.

Penalty legislation provides for common circumstances and these are therefore taken into account in establishing the liability to and/or level of a penalty.

Special circumstances are either

  • uncommon or exceptional, or
  • where the strict application of the penalty law produces a result that is contrary to the clear compliance intention of that penalty law.

To be special circumstances, the circumstances in question must apply to the particular individual and not be general circumstances that apply to many taxpayers by virtue of the penalty legislation.

Uncommon or exceptional

Special circumstances are something that is not otherwise provided for in the legislation. So, for example, they will not include 

  • matters that amount to a reasonable excuse in the case of failures, or reasonable care in the case of inaccuracies, or
  • the usual factors - telling, helping and giving access - which you take into account when you consider reduction of a penalty for quality of disclosure.

Special circumstances are uncommon or exceptional circumstances that should be clearly recognisable as such and are completely separate from the other considerations mentioned in the bullets above. See CH170800 examples 1 and 2 for examples of special circumstances that may exist as a result of uncommon or exceptional circumstances.

Application of penalty law produces a result that is contrary to the clear compliance intention of that penalty law

We may reduce penalties for special circumstances where imposing the penalties would be contrary to the clear compliance intention of the penalty law. See CH170800 example 3 for an example of special circumstances that may exist where the application of the penalty law produces a result that is contrary to the clear compliance intention of the penalty law.

However, we will not reduce penalties through special reduction where such a reduction would be contrary to the clear compliance intention of the penalty regime. In particular, we will not do so on the basis that the underlying tax liability has been paid.

Note: There is specific guidance for self assessment returns. If the person does not meet SA criteria, whether or not HMRC failed to act on information supplied confirming that a self assessment return should not have been issued, you should cancel the late filing penalties in accordance with the operational guidance.