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HMRC internal manual

Compliance Handbook

HM Revenue & Customs
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Calculating penalties: special reduction: when to consider Special Reduction

You must not give a special reduction without authority from TAA to do so.

You only consider special reduction after you have fully taken into account

  • all matters that can affect whether there is liability to a penalty at all, including reasonable excuse if appropriate, and
  • the amount of the penalty

in accordance with the guidance at CH170400.

Once you are satisfied that a penalty is chargeable, and you have considered behaviour, and quality of disclosure, you must consider whether special circumstances are present.

You must consider special reduction in all cases before seeking authorisation to issue a penalty assessment, whether or not the person requests special reduction.

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.

See CH170600 for a more detailed explanation.

Note that special circumstances are circumstances not already taken into account in deciding the penalty chargeable. These could potentially include circumstances which you may have considered in respect of reasonable excuse, but which you decided did not constitute reasonable excuse (therefore they have not already been taken into account in the penalty chargeable).

See CH170800 for examples to help illustrate when special circumstances might exist.

You must consider all circumstances which you have become aware of during the compliance check. If appropriate, consider whether you need to further clarify anything you have become aware of to ascertain whether this would constitute a special circumstance.

In most cases you will conclude that there are no special circumstances, and you must make a note of the reasons for that decision on the PDAC or case records. In the case of careless behaviour you should now consider suspension, see CH405050.

If you do consider that there are special circumstances you must make a submission to TAA, see CH403275.