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HMRC internal manual

Compliance Handbook

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

Example 1

John Franks trading as Park News submits his 2010-11 SA return on 10 August 2011. The return was taken up for enquiry on 11 May 2012 and a request for his books and records was made.

In the absence of a response, an information notice was issued on 22 June 2012 giving him 30 days to comply.

He failed to comply with the information notice and so an initial penalty of £300 was assessed on 19 August 2012.

As the failure continued, daily penalties at a rate of £20 were assessed on 20 September 2012 for the period 20 August 2012 to 19 September 2012 inclusive (31 days @ £20 = £620), see CH270200.

On 28 September 2012 the information notice was complied with in full when the books and records were made available. An assessment for the period 20 September to 27 September should was not made.

Example 2

A status enquiry involving MSC Homes Ltd was opened on 26 March 2010. Tax and National Insurance Contributions of £2.5 million was believed to be at risk. The company failed to respond to a request to provide contracts of employment so an information notice was issued on 27 June 2010.

As a result of the company’s failure to comply with the notice an initial penalty of £300 was assessed on 20 August 2010, see CH270100. The officer contacted the company, offering to help with compiling the information, but the failure continued. Daily penalties at a rate of £60 were assessed on 20 September 2010 for the period 21 August to 19 September inclusive (30 days @ £60 =£1800).

This was paid immediately, but the company still did not produce the documents.

Further daily penalty action was considered unlikely to encourage production of the documents so agreement was sought of the authorised officer to make an application to the Upper Tribunal for a tax related penalty based on tax at risk of £2.5 million.