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HMRC internal manual

Debt Management and Banking Manual

Debt and return pursuit: SA: daily penalties: considering raising a daily penalty

This Guidance applies to tax return years 2009-10 and prior

For 2010-11 onwards daily penalties are raised automatically see SAM61230.

You should only consider raising daily penalties once the return pursuit process has taken effect. A determination must have been considered and in most cases raised. You should review suitability for daily penalties in line with the current guidance.

Considering daily penalty action

When considering daily penalty action, each case needs to be considered carefully on its own merits. You should have previously contacted the taxpayer in an attempt to secure the outstanding return(s) and warned of the consequences of the continued failure to file.

Any approach to charging daily penalties needs to take into account whether

  • fixed penalties have been imposed
  • a determination is appropriate
  • contact has been made with the taxpayer to obtain the return and warn of the intended action
  • the prospects of collecting any penalties are good.

Time limits for imposing the penalty

A penalty must be imposed within 6 years of the 31 January following the year of assessment. This means the penalty notice must be issued within that time.

Warning of daily penalty action

The taxpayer must be warned of the consequences of not filing a return on time. This may have been done by telephone or by letter.

If you decide to take daily penalty action then you must issue an IDMS515 (SA518 in partnership cases)

  • informing the taxpayer that you intend to seek a direction from the Tribunal for authority to impose a daily penalty
  • at least 30 days before the hearing takes place.

You should try a further telephone call to the taxpayer before the hearing is arranged in a final attempt to secure the return.

In partnership cases, only the nominated partner is warned of the partnership penalty.

Deciding the daily rate of the penalty

A daily rate of up to £60 can be imposed. You should consider the circumstances and factors of the case before deciding on the daily rate to charge.

Factors to consider are

  • profession
  • lifestyle
  • previous liability or determination
  • number of outstanding returns
  • level of co-operation and history.

A daily penalty level guide is available to help you establish the daily rate for the daily penalty but the final decision is the responsibility of the authorising officer (senior debt manager or above).

You do not need, in law, to notify the tribunal of the daily rate. However, in practice, if they ask, inform them of the intended level of penalty.