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HMRC internal manual

Compliance Handbook

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HM Revenue & Customs
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Penalties for inaccuracies: how to process the penalty: suspension of a penalty: circumstances in which you cannot suspend a penalty: person becomes liable to a further penalty during a suspension period for a previous 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.

Normally you would not suspend a penalty for a careless inaccuracy where the person becomes liable to that penalty during a suspension period for a previous penalty. This is the case even where the suspension period relates to a penalty for a different tax.

This is because you would have to take this repeated behaviour into account as part of your consideration of how likely the person is to comply with any suspension conditions that you set, see CH83146. Whilst such an incident does not mean that you cannot suspend under any circumstances, it is an indication that suspending the penalty would not be appropriate.

It is important to consider exactly when the person became liable to the later penalty. It may be that the earlier suspension period has already expired when you become aware of the need for the later penalty. However, you need to look at the point at which the person became liable to the later penalty, which is the date on which the inaccurate return or document was submitted.

Example

An HMRC officer carries out a compliance check on Emma’s tax position and finds a careless inaccuracy in her 2009-10 SA return. Emma is liable to a penalty but the officer finds that they can set suspension conditions and considers that Emma is likely to comply with those conditions. Consequently, the officer agrees to suspend the penalty for 10 months. The suspension period commences on 1 June 2012 and expires on 31 March 2013.

On 15 October 2012 Emma submits her 2011-12 self assessment return. An enquiry is opened on 30 November 2012 and the officer finds a further careless inaccuracy, resulting in another penalty. It would not be appropriate to suspend the later penalty because the suspension of the earlier penalty has failed to bring about the desired change in Emma’s behaviour.

The earlier penalty will now also become payable because liability to the second penalty arose during the suspension period for the first penalty, see CH83200.

See CH83146 example 1 where a second careless inaccuracy occurs outside the suspension period.