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HMRC internal manual

Compliance Handbook

From
HM Revenue & Customs
Updated
, see all updates

Information & Inspection Powers: Penalties: What is the penalty: Failure, obstruction, concealment etc: Daily penalties

Daily penalties can be charged where

  • an initial penalty, see CH26640, has been assessed

    • for failing to comply with an information notice,
    • for deliberately obstructing an inspection or
    • for concealing a document

and

  • the failure or obstruction continues after the date the initial penalty was assessed.

If you think daily penalties should be charged, you must follow the operational guidance at CH270200 before assessing them.

Where a person has destroyed or otherwise disposed of a document, they will not be in a position to remedy the continuing failure and you should not impose daily penalties in respect of destruction or disposal of a document.

Where the initial penalty appears to be insufficient in the particular circumstances in which the destruction or disposal occurred, you should consider whether a tax-related penalty is appropriate, see CH26720.

The aim in assessing penalties is to encourage the person to provide the outstanding information or documents or to allow an inspection to be conducted.

Daily penalties should be assessed regularly. This will

  • encourage the person to comply with the information notice or co-operate with the inspection, and
  • prevent even a modest daily penalty giving rise to a single substantial demand.

Although penalties can be assessed for every day that the failure or obstruction continues, they should not be assessed for any outstanding period once the information notice has been complied with or the inspection has been completed, see CH26700.

If you think that there are exceptional circumstances that merit the assessment of daily penalties after the person has complied with the notice or inspection, make a report to Central Policy, Tax Administration Advice.

Where assessing the maximum daily penalties is insufficient in the particular circumstances to encourage the person to comply with the notice, you should consider whether to charge

  • increased daily penalties if the notice is an identity unknown notice, see CH26705, or
  • a tax-related penalty, see CH26720.

FA08/SCH36/PARA40

CEMA79/S118G