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HMRC internal manual

Compliance Handbook

HM Revenue & Customs
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Charging penalties: recording and calculating penalties on the National Penalties Processing System (NPPS): amending or cancelling a penalty case in NPPS: appeals: cancel a penalty

Note: You should only cancel a penalty when:

  • it was not appropriate to charge a penalty or
  • it has been decided that no penalty should have been charged.

Reopen the case in NPPS using the ‘Appeal’ function, see COG91520.

You must not reopen the case using the ‘Raised in Error’ function as NPPS will not cancel the penalty charge on SAFE.

Enter details of the appeal, including the amount of the appeal to be stood over, see CH407850.

To stand over a VAT penalty, you will need to set the ‘appeal indicator’ on the VAT mainframe.

Send the appeal, review or discussion documents showing why the penalty is to be cancelled to an authorising officer, see CH407000.

When you have received authorisation, complete and send a manual Withdrawal, Cancellation or Amendment of Penalty Assessment (NPPS4) to the person, selecting the appropriate option to explain the reason for the cancellation. The manual NPPS4 is available in SEES>Penalties Toolkit>NPPS Letters.

Select Withdraw Penalty Assessment from the Take Action dropdown menu. Complete the details and submit. This will resolve the case.

Where a charge has been created on SAFE, details of the cancellation will be sent from NPPS to SAFE.

If you cancel a VAT penalty you will need to update the VAT mainframe, see CH407960.