EM1360 - Human Rights Act 1998 (HRA): Article 6: Impact on Penalties

Following the decision in King v UK, see EM1361, HMRC has accepted that a limited number of our penalties are ‘criminal’ for the purpose of Article 6 of the European Convention on Human Rights (ECHR). Article 6 applies to companies as well as individuals.

The only penalties involved are those which are based on a maximum of 100% of the tax difference/tax unpaid. We do not accept that any other of our penalties are subject to Article 6.

The most common examples of penalties caught by Article 6 are

• error penalties charged under TMA70/S95 and FA98/Sch 18/Para 20, and
• failure penalties charged under TMA70/S7(8) and TMA70/S93(5).

The classification of ‘criminal’ within Article 6 is for the purposes of ECHR only. It does not make a case criminal for all usual UK domestic purposes and the penalties remain a civil proceeding.

A person subject to proceedings involving Article 6 ECHR has

• the right not to self incriminate
• an entitlement to a fair and public hearing within a reasonable time.

For penalty cases where Article 6 may apply we must be careful not to infringe a person’s rights. It is therefore important that as soon as there is evidence of liability to a penalty we

• warn taxpayers that they do not have to co-operate with our enquiries and of the consequences of such action. EM1362 sets out what you should tell the taxpayer
• work cases without unreasonable delay – this includes taking positive action to overcome taxpayer delay. EM1361 explains how delays may affect our ability to charge a penalty
• tell taxpayers that we will issue early penalty determinations if

This applies to penalties being sought by way of either a contract settlement or a penalty determination.