Introduction and background to excise civil evasion penalty: the law
The Excise Civil Evasion Penalty regime (EXCEP) was introduced by Section 8 Finance Act 1994 and can only be used for offences committed on or after 1 January 1995. Section 8 makes provision for a civil evasion penalty where a person engages in any dishonest conduct for the purpose of evading, or attempting to evade any duty of excise.
A taxpayer may be subject to a penalty under Schedule 41 Finance Act 2008 for:
- Failures to notify where the obligation to notify arises on or after 1 April 2010 see CH70000.
- VAT and Excise wrongdoing where the contravention arises on or after 1 April 2010 see CH90000.
Where a penalty applies to a person’s dishonest conduct under FA07 Sch24 or FA08 Sch41 then a penalty cannot be charged under S8.
If a penalty does not apply under FA07 Sch24 or FA08 Sch41 for a person’s dishonest action then it can give rise to a penalty under S8.
Contraventions involving dishonesty that do not involve an inaccuracy in a document or failure to notify HMRC of an under assessment [or failure to notify] are still subject to the provisions of S8 FA94.
Following a ruling in the case of Dansk Transport og Logistik v Skatteministeriet  STC 1711 HMRC has concluded that it is unable to apply Schedule 41 Wrongdoing penalties in cases where goods have been seized at importation from outside the EU prior to the excise duty point. Consequently, we can impose a penalty under S8 Finance Act 1994 for dishonestly evading Excise duties at the same time as applying S25 Finance Act 2003 penalties for dishonestly evading Customs duties.
The penalty can be equal to the amount of duty evaded or sought to be evaded.
Policy states that Excise civil evasion penalties under Section 8 FA94 can only be applied following an investigation under PN160 or Code of Practice 9 (Cases of suspected fraud).
See VATCEP2510 which sets out the PN160 process for charging Civil Evasion Penalties.
Note: The PN160 process is used to charge both Section 60 and Section 8 penalties.
EXCEP as an alternative to Criminal Proceedings
The introduction of the EXCEP was an alternative to, and not a replacement for, criminal proceedings.
Although EXCEPs are not criminal sanctions under domestic law, Article 6(1) of the European Convention on Human Rights applies to these penalties. You must, therefore, issue the Human Rights message along with Factsheet FS9 at the point you first suspect you may charge an EXCEP, see CH300900.
Note: UK Border Force does not issue the Human Rights message or FS9 and, therefore, it is the responsibility of the HMRC caseworker to issue it.
HMRC has also published its high level statement of criminal investigation policy to give an indication of the kind of cases it will seek to deal with criminally which is available on the HMRC internet site.