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HMRC internal manual

Compliance Handbook

From
HM Revenue & Customs
Updated
, see all updates

How to do a compliance check: penalties for failure to comply with notices: initial penalty

The following guidance covers penalties for failure to comply with:

  • Information notice
  • Tribunal approved inspection notice and
  • Data-holder notice.

To find out when you can assess a penalty for

  • Schedule 36 FA 08, see CH26200
  • Schedule 23 FA 11, see CH29520.

The first penalty you will assess is an initial penalty of £300. This penalty must be agreed in writing by a penalty authorising officer, see CH271500, who will normally be your manager, unless the offence is that of deliberately obstructing a tribunal-approved inspection in which case you must seek the agreement of an authorised officer, see CH260000. You may only charge a penalty for failure to comply with an inspection notice when the inspection notice has been approved by a tribunal.

Template IT07 in SEES Forms and Letters is available for you to get your authorising officer’s agreement, or the agreement of an authorised officer.

You can not charge a penalty if there is a reasonable excuse for the failure or obstruction, see CH26300 for information notice and CH29600 for data-holder notice.

If you suspect that the person will not comply with an information notice, you must get your authorising officer’s agreement to a penalty before the date specified on the notice. This will allow you to issue the penalty assessment promptly.

If the person has not complied with the information notice by the date specified, you must attempt to contact the person by phone. You should tell the person that you have not received the information, and they may have to pay a penalty.

If the person tells you that they need more time to comply with the information notice, see CH223700.

You must consider whether the person’s response shows there is a reasonable excuse for the failure or obstruction, see CH26300. If not, or if there is no response, you must assess a penalty for £300.

If the person tells you that they have sent the information by post, you should allow a reasonable amount of time for it to arrive. Normally this will be four working days. If you do not receive the information within this time, you must assess a penalty for £300.

In any case, you must not delay in getting your authorising officer’s agreement and issuing the penalty assessment. If information notices are to be effective, it is important that you follow these up promptly at all stages.

Note: You are no longer required to write to the person giving them a further 14 days warning before you assess the penalty.

CH26860 and CH29730 explain the time limits within which you must issue a penalty assessment.

The penalty charge will be created using the Strategic Accounting Framework Environment (SAFE), see CH270500 for details of how to create a charge.

When you assess the penalty you should send the person

  • a notice of assessment (with a copy to the agent if there is one)
  • a payslip (generated through Print Payslip using the SAFE charge reference. If you do not have access to a stand-alone printer use manual payslip PS1(BZ) and enter the SAFE charge reference).

You should send a copy of the notice with your penalty notice, marking the copy to show what you still need the person to provide and/or produce in order to comply.

When you have issued the penalty assessment you must consider if collection of the debt should be treated as a priority, see CH206670.

The following penalty notice templates are available in SEES Forms and Letters

  • IIP13 Notices initial - penalty
  • IIP16 Announced inspection initial - penalty
  • IIP17 Unannounced inspection initial penalty

A penalty notice must be authorised by an authorising officer see CH271500

Under no circumstances is self authorisation allowed.

The person may ask for Alternative Dispute Resolution (ADR) instead of making an appeal, see CH280400. Note that if the person does not agree with the outcome of ADR, they will still be able to make an appeal.