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HMRC internal manual

Compliance Operational Guidance

From
HM Revenue & Customs
Updated
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Supporting Guidance: employer compliance: guidance by subject: penalties: formal action

You do not use the PDAC when calculating these penalties.

The majority of cases are settled by agreeing a contract settlement to cover tax, NICs, interest and penalties. Where it is not possible or appropriate to settle with a contract you will need to switch to the formal route COG914180 onwards.

  • For post April 2009 inaccuracy penalties see CH80000.
  • For CIS monthly returns due on or after 19 November 2011 see CH60000.

Penalties are ‘determined’ in a manner rather like raising a Regulation 80 determination. The procedure for authorising/determining penalties will depend on the type of penalty being sought. If you need to issue a penalty you must first seek authorisation from the Authorising Officer. The caseworker must not approve their own penalty determination. The Authorising Officer can be:

  • a line manager or manager with the appropriate skills
  • another manager or tax specialists within a team
  • a tax specialist from another team, or
  • a Customer Relationship Manager (CRM) (the CRM may be the same grade or a lower grade than the tax specialist / caseworker).

The attached formal action penalty table (Word 86KB) shows the main penalty offences for which you may need to consider taking formal action.

The table is not exhaustive. If you propose to seek a formal penalty determination for any other type of penalty offence, for example student loans, you should seek advice from TAA Technical before proceeding, see COG904770.

In all instances the employer/contractor can appeal against the penalty COG914305. Any appeal will be heard by Tribunal (except where the penalty was determined by the Tribunal themselves) and where there is a related appeal against a decision, determination or assessment all appeals should be heard at the same time. Once the penalty has been determined by the Tribunal any appeal would be taken to the High Court.