Penalties for inaccuracies: how to process the penalty: suspension of a penalty: circumstances in which you cannot suspend a penalty: tax avoidance and fraudulent activity
You must check the date from which these rules apply for the tax or duty you are dealing with. See CH81011 for full details.
Your review of the person’s compliance history may show that they have previously been involved in tax avoidance or fraudulent activity. Each case must be considered on its own facts and no single factor will always mean that you should decide not to suspend the penalty.
The use of avoidance schemes is contrary to HMRC’s Anti-avoidance strategy. Where such cases include a careless penalty for an inaccuracy, it would be unlikely that suspension can be offered. In any avoidance case where you consider suspension may be appropriate, see contact link.
Where the person has not been involved in avoidance in the period that you are checking but they have previously been involved in tax avoidance, this will be a strong indication that penalty suspension is not appropriate.
Where the careless penalty arises from transactions connected to fraudulent activity, for example MTIC cases, it is unlikely that such penalties will be suitable for suspension. The connection to fraudulent activity is an indication that improvements in future compliance are unlikely.
Where the person has not been involved in fraudulent activity in the period that you are checking but they have previously been involved in fraudulent activity, this will be a strong indication that penalty suspension is not appropriate.