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HMRC internal manual

Compliance Handbook

Penalties for inaccuracies: how to process the penalty: suspension of a penalty: making a decision to suspend a penalty

You must check the date from which these rules apply for the tax or duty you are dealing with. See CH81011 for full details.

If you think that a penalty is due then you must assess it or, where appropriate, include it in a contract settlement.

HMRC has the discretion to suspend a penalty. But the person can appeal against an HMRC decision not to suspend a penalty. The decision by HMRC not to suspend the penalty is made when we issue the notice of penalty assessment. But that notice doesn’t say that it includes the decision not to suspend the penalty. So you must inform the person separately that you have decided not to suspend their penalty and that they can appeal this decision once they receive the notice of penalty assessment.

Schedule 24 para 17(4) (a) only allows the tribunal to order HMRC to suspend the penalty where the tribunal thinks that HMRC’s decision not to suspend is ‘flawed’. Para 17 (6) explains that ‘flawed’ means flawed when considered in the light of the principles applicable in proceedings for judicial review. In practise, a flawed decision is one which takes into account irrelevant factors or does not take into account relevant factors.

Any decision that you make must be reasonable in all the circumstances of the case. It is important, therefore, that you consider each potential suspension situation carefully.

In making your decision you must

  • take all relevant factors into account and
  • take no irrelevant factors into account.

It is very unlikely that there will be only one relevant factor in your decision. Some relevant factors will carry more weight than others.

The guidance in CH83130 to CH83170 explains the matters that you must consider in making your decision. It will help you to make sure that you cover all the relevant factors.

The guidance in CH83180 to CH83210 explains the notice to suspend a penalty, possible appeals, when a suspended penalty becomes payable and what happens at the expiry of a suspension period.