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HMRC internal manual

Debt Management and Banking Manual

Debt and return pursuit: Environmental Taxes: Aggregate Levy (AL): Power to assess and recover civil penalties as tax due

Civil penalties are issued to penalise persons for breaches in the regulations or forfailures such as the failure to render returns and pay levy due. There are 3 types of penalty:

  • fixed penalties of £250
  • penalties amounting to a % of the amount of duty involved
  • daily penalties of a fixed sum (£20) chargeable for every day that a failure continues (e.g. failure to produce documents).

Where a person is liable to a civil penalty, we may assess the amount due by way of penalty and notify it to him accordingly (paragraph 2 (1) of Schedule 10 to the Finance Act 2001). Where an amount has been assessed and notified to any person under paragraph 2,it shall be recoverable as if it were levy due from him (paragraph 2 (4) of Schedule 10 to the Act).

The power to make an assessment for a civil penalty is subject to review and appeal.

Penalties Team has policy for interest and civil penalties.

For example, a failure to produce records attracts a one-off £250penalty plus further penalties of £20 per day for every day that the person fails toproduce the records.

Time limits on penalty assessments

Three years rule

Paragraph 4 of Schedule 10 to the Finance Act 2001. An assessment made under paragraph 2 of schedule 10 to the Finance Act 2001, (see above) shall not be made more than 3 years after the conduct to which the penalty relates.

Twenty years rule

If levy has been lost as a result of evasion, fraud, or failure to notify liability to be registered, an assessment may be made for any civil penalty relating to that conduct not more than 20 years after the conduct to which the penalty relates (paragraph 4 (2) of Schedule 10 to the Finance Act 2001).
In the event of the death of the person liable to a civil penalty an assessment may bemade up to three years after the death of that person.

Power to recover penalty interest on unpaid civil penalties

Paragraph 7 (3) of Schedule 10 to the Finance Act 2001 states that if a penalty is not paid by the due date for payment we charge interest from that date until the penalty is paid.