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HMRC internal manual

Debt Management and Banking Manual

HM Revenue & Customs
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Debt and return pursuit: SA: daily penalties: continuing daily penalties

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.

Consider charging continuing daily penalties

If the return remains outstanding after the daily penalty has been raised, then consideration should be given to imposing continuing penalties. The number of days between penalties needs to be kept low to prevent excessive penalties being charged and to keep up the momentum of the case. You will need to regularly review the case to avoid an excessive number of days building up.

You should wait until the 30 days appeal period of the initial or previous penalties has elapsed before considering further penalties.

Whilst you do not have to have completed enforcement proceedings for any earlier penalties, you should always consider whether you will be able to collect any continuing daily penalties.

Contacting the taxpayer

You should

  • make every attempt to contact the taxpayer by telephone to warn of continuing daily penalties
  • stress the seriousness of the situation to the taxpayer and the unnecessary financial expense that this is causing them
  • agree a deadline to file the return before imposing further penalties.

If a telephone call can not be made or there is no successful contact by telephone, then

  • issue letter SA513
  • B/F 14 days.

Imposing a penalty

It is important that the total amount of the continuing penalty charge is carefully considered. The daily rate should be charged at the same level as the original penalty.

The calculation starts from the day after the last penalty was charged. Normally the calculation would be to the day before the SA521 but if the number of days in the calculation is high then you should calculate the penalty over a shorter period to ensure that the continuing daily penalty remains reasonable and proportionate but at the same time maintains the pressure on the customer to file the return. This means in these circumstances, the penalty will not be charged up to the day before the SA521.

Each subsequent continuing penalty can be used to close the gap in appropriate and proportionate stages and should generally be in an amount consistent with the preceding penalties charged.

For example

Original calculation

IDMS517 issued 19/06/07

Deemed received 25/06/07

SA521 issued 10/07/07

Calculation period is 26/06/07 to 09/07/07 (14 calendar days).

Rate at £25 per day

Penalty = 14 x £25 = £350.

Continuing calculation

Review date 21 August 2007 (remember this needs to be at least 30 days after issue of SA521 on 10.07/07).

Maintain the daily rate but shorten the period charged.

SA521 issued 31/07/07

Calculation period 10/07/07 to 30/07/07 (20 calendar days)

Rate at £25 per day

Penalty = 20 x £25 = £500.

Authority for charging the continuing penalty

You must obtain authority from an authorised representative of the Board (senior debt manager or higher) to proceed with continuing daily penalties. You should do this by completing a ’DMSA3 - Submission for Continuing Daily Penalties’ (found on SEES Forms and Letters) and submit this to the senior debt manager.

You do not need to apply to the tribunal for authorisation to charge continuing daily penalties.

Further continuing daily penalties

The law does not say how many times continuing penalties can be charged. However, if you find that you need to charge continuing daily penalties a third time then submit the case to the SA Technical Team, Shipley for advice.