Penalties: determination procedures: form 394 - other penalties
Where, exceptionally, the penalty offence does not result from an incorrect return/claim, late return or failure to notify, you should select Other from the penalty offence options.
1. You will already have entered the name, address, postcode, and agent’s details and selected taxpayertype in the SEES template as explained in EM5252.
2. Complete the Total Penalty Payable (if you do not wish to use Tax and NIC Table) box. Do not enter the pound sign and do not include any pence. Do not make any entries on the Tax and NIC Details page.
3. In the Details of penalty - enter freetext box enter details of the statutory provision under which the penalty is being charged and a clear description of the act or failure giving rise to the penalty.
Christine failed to comply with a Section 20 information notice issued on 1 May 2008 for documents to be supplied within 30 days. The Commissioners (who dealt with tax appeals before being replaced by tribunals) imposed an initial penalty under S98 (1) on 13 June 2008 but she still did not supply the information. A determination of daily penalties is drafted on 17 July 2008 to cover the period 14 June to 16 July 2008.
The freetext entry would be: ‘Penalties under S98 (1) (ii) Taxes Management Act 1970 (TMA70) for failure to comply with a notice under S20 TMA70 dated 1 May 2008, at £xx per day for the period from 14 June 2008 to 16 July 2008 inclusive.’
4. If there is more than one penalty offence you must complete a separate 394 as above for each type of offence.
5. The DateofIssue box will show today’s date. If the determination won’t be issued today, you should amend it to the actual date of issue.
6. Print the determination. The taxpayer’s copy must be signed by your manager. Complete the boxes on the issuing office’s copy and retain it in your file. If there is no agent acting, the agent’s copy of the amended determination must be disposed of as restricted waste.
7. Issue the penalty determination notice with a covering letter to the taxpayer. Your letter should explain
- that you are enclosing a formal notice imposing a penalty
- how the penalty should be paid. (EM5254 explains what action you need to take)
- that if it is an SA penalty, interest will be charged if it is paid late
- any other points or issues that are outstanding
- you should also include a copy of factsheet HMRC1 - ‘HMRC decisions - what to do if you disagree’.
8. If you have not already done so, you should also explain
- the facts that you believe give rise to the penalty
- how we calculated the penalty, and
- issue factsheet CC/FS9 ‘The Human Rights Act and penalties’, and if relevant, factsheet CC/FS15 ‘Self Assessment and old penalty rules’.