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HMRC internal manual

MLR1 Penalties Guidance

Penalties guidance: the basic principles of our penalty framework

The basic principles of the penalty framework are relatively simple:

We will calculate:

  • A total starting penalty - This will consist of a

    • fixed starting penalty and
    • an additional penalty determined by the amount potentially exposed to money laundering by the breach.

    See MLR1PP8150 for more details

  • A penalty cap - The total starting penalty will be capped at 10% of the business’s Gross Profit (subject to a minimum of the fixed starting penalty in the case of HVDs/MSBs) to produce a maximum penalty figure.

See MLR1PP9150 and MLR1PP9160 for more details

  • The Final penalty figure - Standard behaviour based percentage reductions may be applied to the maximum penalty figure to arrive at the final penalty figure. See MLR1PP10100 for these reductions.