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HMRC internal manual

Compliance Handbook

Charging penalties: suspending penalties: setting specific conditions: introduction

Suspension conditions must, if met, result in improvements (usually to records or systems) which would prevent future inaccuracies from occurring. They must not simply repeat a statutory requirement.

Conditions must specify what must be done, for example additional records, system controls or checks. It is not sufficient to say ‘do not make the same mistake again’. Finding out as much as you can about how the inaccuracy occurred, can help you decide what improvements to systems and controls could stop it happening again.

They must relate specifically to the person and the particular business you are checking. You must ensure that they are reasonable in the circumstances and not excessive or burdensome.

You should take into account any costs.

You will need to discuss conditions with the person and/or their adviser if they have one. They will have greater knowledge of their systems and they should be asked to suggest improvements. These suggestions can form the basis of the specific conditions you and the person can agree.

When you are setting and agreeing the suspension conditions you should also discuss the checks HMRC may carry out, and evidence the person may need to produce, to satisfy HMRC they have complied with the conditions.

You cannot insist on payment of tax arrears which are outstanding from the period before the commencement of the suspension period as a condition of suspension.

All conditions must be SMART, see CH83153 and below.


You must clearly explain and put in writing

  • what records must be completed
  • the controls and checks that must be put in place
  • the expected frequency of completion.

The person must be left in no doubt about what they must do and that failing to do so will result in the suspended penalty being payable.

See the

  • direct tax example at CH83156, and/or
  • indirect tax example at CH83157 
  • for arrangements for payment when a suspended penalty becomes payable at CH83200.


You will need to decide how we will measure the person’s compliance with the suspension conditions. Think about how you will check if the conditions have been met, and this will help you to decide if they are measurable.

At the end of the suspension period, the person will need to be able to provide some evidence or verification that the changes have actually been made, see CH405350.


The conditions must be proportionate to the size of the identified problem and the nature of the care that needs to be taken.

You should always bear in mind that you are seeking to secure sustainable improvements to the records or systems to avoid future inaccuracies. The person must be encouraged and able to continue with the improvements even after the suspension period has ended.


The conditions must reflect a realistic commercial consideration of the person and any business, and the ability to implement and subsequently meet the conditions. You should be seeking to achieve an acceptable level of reasonable care by the taxpayer and should not be expecting them to achieve perfection.

Time bound

The conditions must include the date by which the person must make the improvements, see CH405200.