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HMRC internal manual

# Penalties guidance: text version of flowchart of how to calculate compliance penalties

## Flowchart; How to calculate a compliance penalty

Text Version

• The fixed starting penalty is £5000

If the business is an ASP/TCSP/EAB:

• Work out the number of relevant clients in the period of the breach
• See the Scale Charge table at MLR1PP9000 to find the relevant scale charge for the number of relevant clients. This is the additional penalty for ASPs/TCSPs/EABs.

If the business is an MSB/HVD:

• Calculate the culpable turnover of the business
• Multiply the culpable turnover figure by 20%. This is the additional penalty for MSBs/HVDs

• Calculate the penalty cap:

• Find out the gross profit of the business
• Multiply the gross profit by 10% to give the penalty cap

If the business is an ASP/TCSP/EAB:

• This figure is the penalty cap

If the business is an MSB/HVD:

• This figure is the penalty cap only if it is less than the fixed starting sum of £5000, otherwise the penalty cap is £5000.

• Calculate the maximum penalty:

• Add the Additional penalty to the fixed starting penalty (£5000) to give a total starting penalty figure
• Consider if the penalty cap is greater than the total starting figure
• If the penalty cap is greater, take the total starting figure as the maximum penalty
• If the penalty cap is lower, take the penalty cap figure as the maximum penalty

• Take this maximum penalty figure and see if it is appropriate to apply a reduction percentage to this figure:
• If a reduction is appropriate see table at MLR1PP10100 and apply the relevant reduction to the maximum figure to arrive at the final penalty figure.
• If a reduction is not appropriate, the maximum figure is the final penalty figure