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HMRC internal manual

Compliance Operational Guidance

Supporting Guidance: employer compliance: guidance by subject: penalties: raising formal penalty determinations - initial penalties arising under S98(1)(a) or S98(1)(b) TMA 1970

You do not use the PDAC when calculating these penalties.

COG914180 explains the initial action to be taken on all cases when raising formal penalty determinations.

The initial penalty under S98(1)(a) or S98(1)(b) TMA 1970 will be determined by the First-tier Tribunal.

Any appeal against the First-tier Tribunal penalty determination is direct to the Upper Tribunal.

You will

  • complete an AO Report Form (available via SEES - forms and letters) and
  • send it to the Authorising Officer.

If the Authorising Officer agrees to pursue formal penalties you will

  • make an application to the tribunal in accordance with ARTG7540 and
  • include 3 copies of form 82C (EC) (one copy to be retained by the tribunal, one copy to be issued to the employer/contractor/subcontractor by the tribunal and one copy for HMRC.

The tribunals service will consider the application in accordance with ARTG7560 and if appropriate set up a hearing.

The tribunal will make a decision at the hearing and if the penalty is authorised will complete the form 82C(EC) and disperse these as above.

You will then

  • complete a SAFE referral stencil (Word 44KB) and
  • a penalty notice letter (EC25 - available via SEES - forms and letters), and
  • send the letters, stencil and a copy of the form 82C(EC) to the SAFE officer.

The SAFE officer will

  • create a charge on SAFE and
  • return the documents to you along with a payslip.

You will then

  • issue the letters, payslip and an appeals note (EC26 - available on SEES - forms and letters) to the employer/contractor and
  • BF the case for 14 days.

If the employer/contractor does not remedy the failure you should

  • consider making a referral to determine daily penalties COG914190.

If the employer/contractor appeals against any penalty determinations you should follow the guidance at COG914305.

Assistance on completing the relevant documents and stencils is at COG914180.