IHTM36165 - Investigating incorrect accounts, information or documents: noting up penalty time limits

There is a 3 year time limit ( IHTM36108) from the date on which the correct tax liability is notified to the taxpayer for pursuing a penalty.

When you begin your investigation into a penalty you should put a note in red ink in the notes box ( IHTM03035) on the front of the file cover. The note should say ‘PENALTY CASE: TIME LIMIT EXPIRES ON (add date 3 years from the date on which the tax payable on the chargeable transfer ( IHTM04027) concerned was notified to the taxpayer)’

The existence of the time limit means that you should

• avoid the premature notification of the tax payable, and
• obtain the penalty or conclude a settlement ( IHTM36261) as quickly as possible once the notification is given.

In any case where 2 years have passed since the tax was notified and a penalty has not been obtained or a settlement concluded, you should refer the file to your SO manager with a note setting out the facts of the case and of the negotiations to date. The B2 manager will decide in conjunction with the Penalty Portfolio Holder whether to send a report to Tax Administration Advice (TAA) ( IHTM36361) to consider taking formal penalty proceedings.