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HMRC internal manual

Compliance Handbook

HM Revenue & Customs
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Penalties for inaccuracies: how to process the penalty: suspension of a penalty: when a suspended penalty might become payable

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

A suspended penalty becomes payable if

  • during the suspension period, the person becomes liable for a further penalty under FA07/SCH24/PARA1 for an inaccurate return or document, regardless of which tax the return or document relates to. The person becomes liable to that further penalty on the date that they give HMRC the later return or document containing a careless or deliberate inaccuracy.

A suspended penalty doesn’t become payable where an inaccurate return or document has already been given to HMRC before the suspension period commences and is discovered by HMRC during the suspension period.

If the further penalty is 0% (see CH83020) HMRC’s policy is that the suspended penalty will not become payable. This is because 0% penalty can only arise for a careless inaccuracy where the disclosure is unprompted and the maximum 100% reduction for disclosure is given. We do not want the person to be dissuaded from making such a disclosure in these circumstances.

  • at the end of the suspension period, the person has failed to satisfy us that all of the conditions specified in the notice to suspend the penalty have been complied with.

However, the person will be regarded as having met the generic condition if they had a reasonable excuse for not filing all their returns on time during the suspension period.

The suspension period could end prematurely when

  • the person is an individual and dies,
  • the person ceases to trade, or
  • the person is a VAT group and the VAT group ceases to exist.

In these circumstances you will need to consider whether the person has met the suspension conditions at the date when the suspension period ends prematurely.

FA07/SCH24/PARA14 (5) & (6)