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HMRC internal manual

Compliance Handbook

Charging penalties: authorisation: introduction

You must obtain authorisation for your penalty decisions before you can

  • inform a person of a penalty decision by giving or sending them a penalty explanation letter, see CH408000 
  • issue a penalty assessment, see CH407750 
  • seek to include a penalty in a contract settlement, see CH411000 or
  • tell the taxpayer that a penalty is not payable.

The role of the authorising officer is to make sure that the penalties legislation is applied correctly and consistently and decisions are supported by sufficient evidence that will, if necessary, convince a tribunal that a penalty is payable.

The authorising officer may differ between business areas and teams, and sometimes between different cases within a team. In normal circumstance the authorising officer is one level above the caseworker and could also be

  • a line manager or manager with the appropriate skills
  • another manager or tax specialist within a team
  • a tax specialist from another team
  • a Customer Relationship Manager (CRM) (the CRM may be the same grade or a lower grade than the tax specialist or caseworker)
  • a Customer Coordinator (CC).

To enable authorisation of your proposed decisions on behaviour and the quality of disclosure, you must give the authorising officer a clear explanation of the reasons for your decisions and give them access to the supporting evidence.

Penalty decisions must be recorded and authorised on the Penalty Decisions and Actions Checklist (PDAC), see CH407100. The PDAC provides an audit trail of actions taken during a compliance check and the evidence that supports penalty (or no penalty) decisions. The PDAC also enables reviews of penalty decisions to be done more efficiently.

If you have discussions with the taxpayer about your opinion of the penalty position before your decisions have been authorised, you should tell them that your views must be authorised and the final decision may be different.

After the PDAC has been authorised, any penalties must be entered into the National Penalties Processing System (NPPS) and authorised, see COG90000. This includes penalties that will be included in a contract settlement, as well as those that will be charged by assessment. If you decide that no penalty is payable or the penalty is reduced to zero, your decisions must be recorded and authorised on the PDAC but you do not need to enter these cases on NPPS, see CH407620.