A fixed automatic penalty can only be capped on receipt of the return where the tax payable is less than the amount of the penalty. Such a penalty can be reduced on receipt of the return if the penalty exceeds the amount of tax payable (TMA70/S93(7)) or where the taxpayer had a reasonable excuse (see EM4562).
The penalty cannot be varied by the Commissioners.The Commissioners may however set the determination aside if they are satisfied that the taxpayer had a reasonable excuse throughout the period of default (see EM4563).
If the appellant asks for the appeal to be heard by the Commissioners, explain that they have no power to vary the penalty which will be reviewed on receipt of the return. If the taxpayer persists you must list the case for hearing. Under Regulation 3(1) of the General Commissioners (Jurisdiction and Procedure) Regulations SI 1994/1812 and Regulation 3(1) of the Special Commissioners (Jurisdiction and Procedure) Regulations SI 1994/1811 the appellant has the right to serve notice on the Clerk to the Commissioners that they wish a date for the hearing to be fixed.