HMRC internal manual

Enquiry Manual

Penalties: Information Returns: Failure to Provide Information etc - Daily Amount

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The officer making the determination can set the penalty ‘at such amount as, in his opinion, is correct or appropriate’.

A Grade 6 should personally approve the amount of penalties included in the determination EM5321.

The maximum will be £60 for each day from the date after the initial penalty was imposed by the tribunal to the last working day before the determination is issued (inclusive) and care should be taken not to exceed this. However, it is not necessary nor always appropriate to determine the maximum penalty and the Grade 6 should give the question due thought.

When deciding on the amount of such penalties the Grade 6 should take into account all the circumstances of the case including particularly the level of the initial penalty imposed by the tribunal.

Where the tribunal has allowed some mitigation in awarding the initial penalty it will normally be appropriate to follow its lead in fixing the continuing penalties. For example, if the tribunal awarded an initial penalty of £150, continuing penalties of £30 per day will often be appropriate.

But if the tribunal awarded a very small or nominal initial penalty, perhaps in the hope or expectation that this would lead to completion of the return, continuing penalties should usually be set at higher levels and should not be less than £10 per day. If the tribunal awarded the maximum £300 the Grade 6 should not automatically set the daily penalty at the maximum of £60, but should consider whether in the circumstances a lower figure would be more realistic and should bear in mind that our objective is to enforce the production of missing returns. The maximum penalty of £60 per day should be reserved for the most serious cases.

You should also take the general background to the case into account, for example

  • the length of the delays
  • the taxpayer’s attitude and co-operation so far (if any)
  • whether the taxpayer is an habitual defaulter
  • the size of the undeclared income or gains believed to be involved.

We expect that, taking the above into account, most daily penalties will fall into the middle of the range with higher amounts being taken in the more serious cases.

Procedures in making a determination can be found at EM5251+. More than one penalty can be determined on the same determination set.