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HMRC internal manual

Excise Civil Penalties Manual

Types of penalties: Daily penalties

Taxpayers are liable to daily penalties for the following contraventions

  • failure to pay duty
  • failure to render returns
  • failure to keep or produce records.

Daily penalties can only be applied in addition to fixed or geared penalties where the conduct resulting in the liability to receive the initial penalty continues.

If you think a daily penalty should be charged, it must be applied from the day following the first day of the default - ie the day after which the duty or assessment became due or the date the trader was first notified about the requirement to keep or maintain a particular record.

Under Section 13(3)(a) of the Finance Act 1994 the notification of an assessment of daily penalties is required to specify a date to which the penalty is calculated.

The date must be no later than the date of the notification. When you issue a daily penalty you should also send a letter warning that the daily penalty is continuing to accrue and that further daily penalties may be issued by a specified date if the conduct continues.

The application of a daily penalty is an additional means to encourage compliance. If you think daily penalties should be charged, action should be taken promptly and should be restricted to a limited period, for example 28 days. For guidance on how to issue a penalty over a 28 day period, see ECP4620.

If the trader has failed to respond within this period it is unlikely that the issue of any further daily penalties would have any effect on compliance, see ECP4610. Prompt action should then be taken to recover the debt. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)