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HMRC internal manual

Inheritance Tax Manual

Calculating the penalty: Board’s policy

Penalties are expressed as sums ‘not exceeding’ and it follows that the First-tier Tribunal or any Court before which penalty proceedings are taken can impose a penalty less than the maximum. Under IHTA84/S253 the Board also has powers to compound for penalties before commencing proceedings and, indeed, mitigate the penalty after judgement.

With this in mind, the Board’s policy in arriving at a pecuniary settlement for tax geared penalties is to abate (IHTM36174) the maximum statutory penalties to an appropriate percentage of the culpable tax (IHTM36176). In effect the Board is giving up a right to take proceedings in return for an agreed sum. The Board’s policy is also to abate non-tax geared penalties.

Criminal proceedings (IHTM36172) may affect the ability to seek a penalty.