When you negotiate a penalty you must explain why you are
seeking a penalty and the offence involved. If this is not done in
a letter, there should be a clear telephone note or note of a
meeting on the file which shows that this was fully explained
before you invite the taxpayer to make any offer in settlement.
It is equally essential that in any discussion or correspondence about penalties the question of abatement should be clearly brought out. You must
If an agent is acting, you can in the first instance put these
matters to the agent, with a request that the client is made aware
of the position. But if negotiations become protracted or
deadlocked, you should ask for a meeting with the taxpayers
themselves so you can explain your views directly to them. If the
meeting is refused, you should write to the taxpayers, copying your
letter to the agent, setting out your case and covering the matters
referred to above.
In larger and more difficult cases, you should seek an interview with the taxpayer and the agent at the outset rather than write. You cannot insist on an interview although you should point out that it is essential for the taxpayer to know exactly what the position is and it will be the last opportunity to make a plea in mitigation of the penalties you consider due. This can usually best be done at an interview.
You should not normally hold a settlement interview with the taxpayer alone, unless the agent is aware that you are doing so and does not object.