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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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Accounting procedures: repaying a penalty

You should prepare a form CAS 16 showing a negative figure for the full amount of the penalty originally paid and write in capitals at the top of the CAS 16 the word ‘WITHDRAWN’. This reverses the effect of the original CAS 16 and allows Cashiers to take the money out of account and effectively place it back on deposit.

If you are repaying only part of the penalty you must then prepare a further CAS 16 showing the amount you want to leave on charge.

You should then prepare forms Sect 6 and Sect 83 as for a normal repayment (IHTM31601), but note that interest supplement (IHTM31665) does not apply. IHTA84/S235 provides for the provision of interest supplement where tax, or interest on tax, in excess of the actual liability has been paid. The provision does not therefore apply to a penalty payment. Any penalty repayment takes the form of an ex gratia payment by HMRC.

As the ‘WITHDRAWN’ CAS 16 puts the money back on deposit, when completing the Sect 6 the original Cashiers reference should be inserted in the ‘Deposit number’ box and the ‘Money on deposit’ box ticked in the choices which follow.

Repaying a penalty is an unusual situation so please send the file together with the CAS16 or CAS 16s and the Sect 6 & Sect 83 under cover of an explanatory note to Cashiers Section, addressed to the Chief Cashier.