EM5207b - Penalties: Formal Assessments and Determinations: Discussions with the taxpayer: When to take formal action: Steps to take

If you intend to proceed formally, you must

• seek agreement from your manager to proceed formally, see EM5207a.
• Issue a Warning Letter (Word 32kb) (this link opens a draft letter) explaining our view of the tax position and advising that if we do not hear from the taxpayer within 30 days, we intend to issue a closure notice and tax assessments. where appropriate, explain in the letter that you are considering penalties with the intention of issuing both tax and penalty decisions together after the 30 day period has elapsed.

If we are taking formal action because of non-cooperation and constructive discussions resume within approximately 30 days from the date of the Warning Letter, you should continue to discuss an agreed settlement.

In practise this means that, if the person does not contact you within 15 days from the date of the Warning Letter, you must

• seek authorisation from your Authorising Officer, who will normally be your manager, to issue penalty assessments or determinations. If determinations are required you will need to complete an AO Report Form which is available in SEEs. A Penalty Decision Action List (PDAC) will also be required for Schedule 24 penalties.
• issue a Penalty Explanation Letter which is available in SEEs, allowing 15 days for the taxpayer to reply. This should be sent with a covering letter making reference to the Warning Letter. If you intend to charge any penalties that cannot be explained in the NPPS100, which is available in SEEs, you must explain these in the covering letter.

If the person does not contact you about the NPPS100 within 15 days from the date you issue it, you must issue formal closure notices, revenue amendments, discovery assessments and the penalty assessments and determinations at the same time.

Appeals to HMRC

If the taxpayer intends to appeal either of the decisions, they must first appeal to HMRC within 30 days of the notice, see ARTG2210.