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HMRC internal manual

COTAX Manual

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HM Revenue & Customs
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Penalties: penalty determinations: penalty inhibition signals

This subject is presented as follows

Inhibit automatic penalty output
No penalty required

Inhibit automatic penalty output

COTAX can automatically set an inhibit penalty signal for any AP. You can also set the signal to prevent the automatic issue of return reminders and notices of penalty determination.

The signal is used to stop the issue of penalty output to companies or their agents whilst the company’s liability to penalties is not clear, such as when it appears that the AP record may be incorrect.

COTAX automatically sets the signal in the following circumstances.

  • An e-filed return is shown as not allocated or a paper return is mismatched. See COM132000 for more information. It unsets the signal when the next return is logged on COTAX.
  • On the superseding AP when you supersede an AP for which you have already issued a penalty determination. See COM101140 for more information.
  • In Group Payment Cases, 18 months after the end of the AP (that is, at the TR1 point).

When you want to set the inhibit penalty signal manually use function MPEN (Maintain Penalty Signals). You need to set the signal when you are considering a claim that might result in recording a deferred filing date (Word 38kb) in COTAX and you want to temporarily suspend the issue of penalty output. See COM100100 for more information.

You can also use function MPEN at any time to unset the signal for any AP.

All the indicators need to be unset to start the issue of automatic output.

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No penalty required

You can also use function MPEN to set or unset the no penalty required signal for an AP.

COTAX makes no more penalty determinations for the AP when you set the indicator, but it does not automatically cancel any existing charges.

When you receive an appeal against a penalty determination and decide that the penalty is not due you can use function PPEN (Prepare Penalty Determination) to reduce the determination to nil.

You can also set the no penalty required signal at the end of fFunction RAMA (Record / Amend Assessment) if penalties are due.

See COM101031 for a list of functions to use in particular situations.