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HMRC internal manual

Debt Management and Banking Manual

Debt and return pursuit: new penalties processes for DMB: Taxes Acts penalties - Income Tax, PAYE, Corporation Tax

Contract settlement

Where applicable, compliance caseworkers will continue to include tax and penalties together in a contract settlement.

Penalty assessment

Where a contract settlement is not appropriate the compliance caseworker will arrange to recover the tax due under the relevant HoD system and issue a formal penalty assessment using NPPS. The HoD reference is used for these penalties. The penalty assessment outlines the overall penalty position to the taxpayer.

Penalty charge on SAFE

A penalty charge is automatically raised on SAFE which issues the relevant payslip and reminders and passes the debt to IDMS if unpaid.

SAFE charge reference number

The SAFE charge reference number is sent to IDMS for use on payslips. It must be used when the taxpayer makes payment by whatever method including debit card, credit card and direct debit.

You can view the SAFE charge reference number via the View Customer Account Role on SAFE. It is in the format X@W plus 11 digits, with @ being the check character.

Additionally, the penalty ID is the last digits of the SAFE charge reference number, excluding the leading zeros. For example, in the SAFE charge reference number XAW00000012345, the penalty ID is NPPS-12345.

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The IDMS work item appears on the C/W HoD default worklist or if appropriate for SA, Corporation Tax and PAYE is passed to the Debt Management Telephone Centre (DMTC) for a telephone call.

Following a telephone call by the DMTC and dependent on how the case has been wrapped, the case is either sent to Field Force or Summary Warrant if appropriate for further enforcement action, or the case goes back into the relevant campaign.

Where there is a Taxes Acts penalty work item in IDMS for SA, Corporation Tax or PAYE you may see an associated tax debt too. You should look for any associated debt and if appropriate link them together before pursuit.

If there are signals/conditions set that take the case out of the automatic process these will also apply to the penalty work item. You should work these cases in accordance with existing guidance.

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Suspended Penalties

The legislation allows for penalties due to inaccuracy incurred due to careless behaviour to be suspended for an agreed period of no longer than 2 years. The taxpayer must agree to certain conditions to address the behaviour that led to the penalty. Suspended penalties are not collectible and therefore not passed to DMB for pursuit unless the taxpayer fails to meet the conditions.

IDMS partial suspension

Caseworkers may agree to suspend only part of an inaccuracy penalty leaving the remainder payable. The part of the penalty that is not suspended is raised as a charge on SAFE and if unpaid will move to IDMS as a Taxes Acts penalty work item as described above.

If the Taxes Acts penalty or linked set containing a Taxes Acts penalty work item is awaiting automatic action and an increase is received IDMS moves the singleton or linked set to the appropriate case worker role. It will have a next action of ‘Update Received’ and a next action date of ‘Today’.

You should review the case and take the appropriate next actions however you must not take any action to pursue the increased part of the Taxes Acts penalty until 30 days after the posting date of the increase.

IDMS release of suspended penalties

If a suspended penalty is released from NPPS because the taxpayer failed to meet the suspension conditions NPPS passes the penalty debt to SAFE which issues a payslip and reminders, and passes the debt to IDMS if unpaid.

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You can enforce these penalties using the County Court Bulk Centre (CCBC).

There is a drop down list on IDMS of all the penalty types to aid DMB Enforcement & Insolvency Service (EIS) for use in their statutory demands and petitions.

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Company officer liable cases

Where a penalty is assessed against a company the legislation allows that an officer of the company can be made liable for all or part of the penalty. Where Compliance determines the company officer is liable for all or part of the penalty, they will notify the company officer in writing (on the personal liability notice NPPS8A).

Where the company officer is liable, the penalty assessment remains against the company. To ensure Debt Management pursue the company officer, Compliance will manually notify Debt Management of these cases via the relevant head of duty Single Point of Contact (SPoC).

Temporary guidance is in place with the head of duty SPoCs to deal with these cases. This guidance will be updated in due course.