The conduct of a hearing of an appeal against a penalty determination is much the same as the conduct of a hearing of an appeal against an assessment etc except that the onus of proof in an appeal hearing (see AH1320) in respect of a penalty determination rests on HMRC. Section 100B(2) TMA 1970 specifically excludes the statutory onus of proof (Sections 50(6) to 50(8)) from applying to appeals against penalties.
When you make a penalty determination you are asserting that an offence has been committed. In the case of a penalty relating to a failure to do something you must adduce evidence of the alleged failure. The appellant can either introduce evidence to rebut it or offer their 'reasonable excuse'. The evidential burden (see AH1325) is likely to be significant in all 'failure' penalty cases, especially when the penalty is charged for failure to comply with an obligation such as not making a return by a specified date.
Appeals against penalty determinations are civil proceedings (R v Special Commissioners, ex parte Martin, 48 TC at page 8A-B) so the standard of proof is "on the balance of probabilities" and not the (higher) criminal standard of "beyond reasonable doubt". The more serious the accusation the higher the standard of proof must be. Commissioners can be expected to treat as very serious any allegation by HMRC that a taxpayer’s conduct has rendered him liable to a penalty and will expect therefore that there should be strong evidence to substantiate the allegation before they are willing to accept that it has been proved.
In presenting your case to the Commissioners you should make a logical analysis of the constituent elements of the offence and provide separate proof of each of them. See AH0735 regarding the use of documentary evidence.
For a tax-geared penalty, TMA70/S101 establishes that an assessment which can no longer be varied by any Commissioners on appeal or by order of any court is sufficient evidence, for the purposes of penalty action, that the amounts in respect of which tax is charged in the assessment arose, or were received, as stated in the assessment.
General Commissioners will not normally wish to enquire too closely into the basis on which assessment figures have been calculated if their attention is drawn to Section 101, but it should be noted that the section speaks of "sufficient" evidence and not "conclusive" evidence.
In technical/evidential terms, the effect of Section 101 is to create a rebuttable presumption concerning the quantum of the taxpayer's taxable income and chargeable gains (although the onus of rebutting the presumption is not easily discharged). Although the taxpayer cannot re- argue the quantum of the assessments at the penalty hearing, the Commissioners would nevertheless be entitled in an appropriate (though rare) case to consider evidence that the assessments may be excessive and to reduce the amount of the penalty on that ground (see the further mitigation allowed by Scott, J, in very unusual circumstances, in Willey v East Dereham Commissioners, 59 TC 640 at 649E-F).
Even if the figures have been agreed with the taxpayer, or his agent, you should be well briefed as to the basis on which the assessments were calculated in case, exceptionally, any such question should arise.