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HMRC internal manual

Debt Management and Banking Manual

Debt and return pursuit: SA: daily penalties: imposing the daily penalty

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

For 2010-11 onwards daily penalties are raised automatically without the need to apply to the tribunal for permission, for more information about daily penalties see SAM61230.

Penalty notice

If the return has not been filed 14 days after the deemed receipt of the IDMS517 (Direction notification), issue an SA521 Penalty notice to the customer.

In partnership cases issue a penalty notice (SA522) to each partner.

Deemed date of receipt of IDMS 517

The deemed date of receipt for the IDMS517 is four working days after issue. For example, for an IDMS517 issued on:

  • Monday 05/02/2007, this would be Friday 09/02/2007
  • Tuesday 19/06/2007, this would be Monday 25/06/2007.

Calculating the penalty

The penalty is calculated

  • from the day after the day the taxpayer is deemed to have received the IDMS517
  • to the day before the issue of the SA521.

There should be at least 14 calendar days between the two dates. But you should try to avoid any unnecessary delay in issuing the SA521 as this will add to the penalty amount. Any delay may be regarded as being unreasonable and become grounds for appeal.

For similar reasons do not delay the issue to allow the taxpayer more time to file because if he has a reasonable excuse to delay filing then this could provide grounds for appeal, which will be considered.

Example of calculation

An example of a calculation is

  1. IDMS517 issued 19/06/07
  2. Deemed received 25/06/07
  3. SA521 issued 10/07/07
  4. Calculation period is 26/06/07 to 09/07/07 (14 calendar days).

Creating the penalty

The penalty should be manually imposed on the SA record using IDMS function Raise Daily Penalty. The due date for payment of the penalty is 30 days after the issue of the notice.

Right of appeal

The taxpayer has the right of appeal, which must be made within 30 days of the date of the penalty notice.