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HMRC internal manual

Enquiry Manual

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HM Revenue & Customs
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Penalties: determination procedures: amendments

You may need to amend a penalty determination when an appeal has been settled. You should make the amendment using form 397 which is available through Excel / SEES / Forms and Letters / Compliance. Form 397 is very similar to form 394 and you should complete it following the instructions in EM5252 and EM5253.

If you are amending a penalty to nil, show the details of the penalty exactly as in the original determination. In a determination originally made under

  • EM5252 show any revised figures of Tax/Tax Difference and NIC/NIC Difference. The penalty should be shown as ‘0’. The template will not allow you to enter the word ‘Nil’.
  • EM5253 enter ‘0’ in the Total Penalty Payable (if you do not wish to use the Tax and NIC Table) box. The template will not allow you to enter the word ‘Nil’.

Where, exceptionally, the tribunal has determined a penalty charge in a figure that includes an amount of pence, ignore the pence when completing the 397 form - for example, a penalty of £7.50 per day for 31 days should be shown as £232, not £232.50.

Print the amended determination. The taxpayer’s copy must be signed by your manager. Complete the boxes on the issuing office copy and retain it in the file. If there is no agent acting, the agent’s copy of the amended determination must be disposed of as restricted waste.

Issue the penalty determination notice with a covering letter to the taxpayer. Your letter should explain

  • that you are enclosing a formal notice amending a penalty
  • how any penalty that is due should be paid. (EM5254 explains what action you need to take)
  • that if it is an SA penalty, interest will be charged if any amount due 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’.

If you have not already done so, you should also explain

  • the facts which you believe give rise to the amended penalty
  • how we calculated the amended penalty.

Note: The repayment of a penalty does not attract repayment supplement.