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HMRC internal manual

Debt Management and Banking Manual

Debt and return pursuit: PAYE: raising a penalty charge and issuing a penalty notice

The penalty charge will be raised clerically on SAFE, which is also the accounting system for these penalties.

Creating a SAFE charge

Once you have decided a penalty is to be charged, you will need to raise the charge on SAFE.

Important: You must raise the SAFE charge before printing and sending the penalty notice to the customer. The SAFE reference must be added to the letter and payslip before issue. Failure to do this will result in misallocated payments.

For guidance on raising a penalty charge on SAFE see the Late Payment Penalty User Guide.

Penalty Notice component parts

Issuing penalties is a clerical process that has partially automated support from the BDApp calculator and SEES. The penalty itself is made up of 3 component parts, all of which must be sent to the customer at the same time:

  • Penalty notice (FPI3) - produced from SEES (this includes the summary table from the calculator)
  • Payslip - produced from Print Payslip
  • Paying HMRC - PAYE late payment penalties leaflet produced from SEES (FPI Payment 1).

Creating and issuing the penalty notice

Once you have created the SAFE charge you are ready to issue the Penalty Notice. This process is started through the ‘Save calculation/ create letter’ button on the Main screen in the calculator. The button has two functions; it will:

  • save a copy of the penalty calculation into the designated CAF folder (only if you have permissions to access that folder)
  • take you to SEES Forms and Letters to create the Penalty Notice.

Saving the calculation to the CAF

When you select the button, the penalty calculation is saved in the CAF folder for the relevant tax year ending the penalty relates to (so those for 2011-12 will be in 2012).

If you amend or raise additional penalties for the same customer and tax year these will be saved in the CAF in addition to the original charge but under the date the penalty was saved.

Calculations will be saved in the respective CAF for 7 years from the date saved. You do not need to keep a paper copy of the Penalty Notice as the penalty calculation is automatically archived.

For full guidance on creating and issuing Penalty Notices see the Late Payment Penalty User Guide.

Welsh versions

If the Welsh Language signal is set, you must arrange for Welsh versions of the penalty notice, how to pay information sheet and payslip to be issued by the Welsh Language Team.

Creating and issuing a payslip

All penalty notices must be issued with a payslip containing the SAFE charge reference number to ensure correct payment allocation to the penalty charge. You should use Print Payslip to create the payslip, and despatch with the penalty notice and paying HMRC leaflet to the customer.

For full guidance on creating and issuing payslips see the Late Payment Penalty User Guide.