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HMRC internal manual

Specialist Investigations Operational Guidance

HM Revenue & Customs
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Settlement by agreement: consideration of penalties: under-assessment accepted where no return made

This instruction applies to penalties charged for periods to which Sch 24 FA 2007 applies.

A person who does not notify HMRC of an under-assessment may be penalised under paragraph 2 of Sch 24 FA 2007. If that person had not previously submitted a return for the period in question, a penalty will usually be chargeable, and it should not be necessary to demonstrate that the person knew that the assessment was inadequate.

HMRC must consider whether the person ‘knew or should have known about the under-assessment’. Someone who receives an assessment for an unreturned period would reasonably be expected to check the assessment. That check could include preparing the necessary accounts or calculations which would have been returned, if this has not already been done, in order to compare what has been charged with the correct amount.

The person therefore ‘knew’ - if they checked, or ‘should have known’ - if they did not check.

Further information can be found at CH81170.