The hearing of an appeal against a penalty determination is
governed by the same Regulations as other appeal hearings (see
AH0450 and subsequent paragraphs). See AH1100 and subsequent
paragraphs for guidance on which General Commissioners should hear
the appeal.
There is no statutory provision to prevent Commissioners who
determined appeals against the underlying HMRC assessment or
amendment from hearing an appeal against a penalty determination,
but there may be cases in which the Commissioners or their Clerk
judge it better, having regard to the rules of natural justice (or
fairness), that they should not. This is a matter entirely for them
to decide.
The general guidance on preparation for a
Commissioners’ hearing at AH0600 and subsequent paragraphs
applies. In particular, see
The hearing of an appeal against a penalty determination is a
quite separate form of proceedings from the hearing of an appeal
against an assessment or amendment. Be prepared to introduce all
the necessary evidence to support the penalty claim even where the
same Commissioners may have considered the same evidence at an
earlier appeal hearing in respect of an assessment, and even though
the same Commissioners may have made an earlier finding of
fraudulent or negligent conduct. This aspect of the proceedings
could assume particular importance in the event of an appeal
against the Commissioners’ decision to the High Court or the
Court of Session.
See AH0700 and subsequent paragraphs for guidance on
evidence, including notes of interview (AH0755).
Normally, the amount of tax payable will have been finalised
before the hearing of the appeal against the penalty determination
but following the King v UK case there may now be cases where an
early penalty determination may be made before the tax assessment
becomes final and the tax and penalty appeals heard at the same
Commissioners meeting, see EM 1360 et seq.
The Authorised Officer should normally take the appeal
hearing on behalf of HMRC, although if it is their case and he/she
is to give evidence another Inspector should conduct the
proceedings. Where, apart from a case in which he/she is to appear
as a witness, the Authorised Officer cannot take the appeal
hearing, Central Policy - Tax Administration Advice Team, Stockport
should be consulted.
If required, produce the Board's Order showing officers
authorised to make penalty determinations. Give a copy to the
appellant as well as to the Commissioners (Willey v East Dereham
Commissioners, 59 TC 640 at page 648C, a case on pre-FA 1989
penalty proceedings, but which would apply subject to any necessary
changes being made).
It has been held that an unsettled relief claim, made after
an assessment has become final, is no bar to penalty proceedings
(Khan v First East Brixton Commissioners, 59 TC 242 at pages 244E
to 245B). In such a case the relief claim should, if possible, be
disposed of before the hearing of the appeal against the penalty
determination and the amount of the penalty revised accordingly. If
that would delay the hearing unreasonably it should go ahead. Tell
the Commissioners that the HMRC will exercise its powers under
TMA70/S102 to mitigate penalties and will make a proportionate
reduction in the penalty if, when the claim is settled, the
culpable tax (and/or NIC) is reduced.
