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HMRC internal manual

MLR1 Penalties Guidance

Penalty guidance: penalty and pre-penalty notices: introduction

These notices must be issued on the same basis as warning letters ensuring they are addressed to the correct legal entity following the guidance in MLR1PP6200 

Before the penalty notice, or any penalty, is issued, the business should be given the opportunity to send to the Compliance Officer any comments about the way the penalty is going to be calculated,.

There is no legal requirement to issue a pre-penalty notice so there may be some limited circumstances when this is not necessary. For example a business may have sent a full explanation why it failed to register on time. Because the simplified penalty framework will apply to registration breaches, it should be possible to fully address the points raised in any penalty notice, without issuing a separate pre-penalty notice.

Before the pre-penalty notice is issued approval should be obtained from the Countersigning Officer (who must be at least one grade higher than the officer issuing the penalty).

Businesses will be given 30 days from the date of the pre-penalty letter to send us any comments before a formal penalty notice is issued. If we receive any comments within this period we will reconsider the penalty.

Comments made in response to a pre-penalty notice are neither a formal Review nor Appeal but the opportunity to point out any areas of disagreement that exist about any liability to a penalty or the way that the penalty has been calculated. This is also an opportunity for the business to present additional details to us that were not available or known at the time of the Compliance Visit, or to replace a determination with accurate figures. For more information about determinations see MLR1PP8520 MLR1PP9050 and MLR1PP9300.

Making comments to us in response to a pre-penalty notice does not remove a business’s legal right to a Review of the final penalty or to appeal to the Tribunal Service once a penalty notice has been issued. If the business requests a review or appeal of the final penalty but at the same time provides further information, the officer must reconsider the penalty decision, in light of this information. If the new information enables the officer to reach agreement with the business the officer should vary or cancel the penalty as appropriate and there is no need to send it to the review/appeals team. If the officer does not vary or cancel the decision or if the trader is still unhappy with the variation it will need to go to the review/appeals team as originally requested.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000) . (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

See MLR1PP11550 and MLR1PP11600 for more information about Reviews and Appeals.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)