CH401050 - Charging penalties: introduction: overview

This operational guidance takes caseworkers, their managers and authorising officers through the decisions and actions required in order to charge penalties under

• Schedule 24 of the Finance Act 2007
• Schedule 41 of the Finance Act 2008
• Schedule 55 of the Finance Act 2009

You must establish and record the penalty position in all compliance cases where you have found

• inaccuracies in returns or other documents or under-assessments under FA07/Sch24 see CH80000 
• a failure to notify a relevant obligation under FA08/Sch41, see CH70000 
• certain VAT or excise wrongdoing under FA08/Sch41 see CH90000 
• where, by failing to make certain returns on time, a person deliberately withholds information that would help us to assess their tax liability (FA09/Sch55), see CH60000.

These pieces of legislation set out a penalty framework that includes,

• the person’s behaviour that led to the inaccuracy, failure or wrongdoing
• if, when and how much the person told us about the inaccuracy, failure or wrongdoing. This is known as disclosure.

Behaviour is the action the person took (or didn’t take) that led to an inaccuracy, failure or wrongdoing, see CH402050.

For information on the available reductions for disclosure, see CH403200.

There is no penalty payable

• where an inaccuracy was as the result of a mistake despite taking reasonable care, see CH81120 
• there is a reasonable excuse for

• • a failure to notify, see CH71500,
  • a VAT or excise wrongdoing, see CH92000 
  • a failure to file on time, see CH61500.

However decisions in these cases must still be authorised, see CH407000.

FA07/Sch24 also includes a penalty for failure to notify HMRC within 30 days of an under-assessment of tax. This penalty is not determined by behaviour and is set at a maximum of 30%, see CH81170, which may be reduced to nil if a full reduction for disclosure is given.

This guidance will help you

• ensure the person’s human rights are protected, see CH300000 
• get authorisation for your penalty decisions, see CH407000 
• record and charge penalties on the National Penalties Processing System, see CH401250,
• record decisions not to charge penalties, for statistical purposes, see CH401252 
• suspend penalties, where appropriate, see CH405000.
• to consider a special reduction, where appropriate , see CH403250.