UTT17100 - Penalties: circumstances in which a penalty is chargeable overview

Part 3 of Schedule 17 to Finance Act 2022 provides for a penalty to be chargeable if a qualifying company or partnership is required to give a notification and fails to do so. This covers:

• not notifying within the time specified,
• not submitting a notification when one is required, or
• submitting an incomplete or inaccurate notification.

A penalty will not be charged where there is a reasonable excuse for the failure to comply with the legislation. This will be considered on a case-by-case basis.

Whilst a person will be liable to an Uncertain Tax Treatment (UTT) penalty in the circumstances described above, HMRC has discretion over whether to assess that penalty. That discretion is conferred by Paragraph 23, which states that if a person becomes liable to a penalty, HMRC ‘may assess’ it.

A decision to assess a penalty should take account of all relevant facts, including the nature of the failure and the inherent compliance risk of the business concerned.

A Customer Compliance Manager (CCM) or a caseworker must record the reasons behind any consideration of whether or not to assess a penalty and ensure that this is stored for future reference.

If you conclude that it would be appropriate to exercise HMRC’s discretion to not assess a penalty, you should explain to the customer:

• why they were liable to a penalty in the first place.
• the factors you have taken into account in considering whether or not to assess the penalty.
• your reasons for exercising discretion to not assess the penalty.
• the steps they need to take to fully comply in future.

The penalty follows a failure to meet a notification requirement and is chargeable on the person (the company or partnership) required to make the notification. In cases of difficulty, CCMs or caseworkers should contact their nominated business contact for advice.

FA22/SCH17/PARA20

FA22/SCH17/PARA21