MLR1PP10610 - Penalties Guidance: The suspended penalty: Continued
The suspended penalty is only applicable if the starting penalty has not already been reduced to nil. The penalty notice must be for the total penalty including the 5% suspended penalty. If the business does not agree with any aspect of the penalty including any amount that has been suspended it should ask for a review of the penalty or if they do not want a review, appeal directly to an independent tribunal within 30 days from the date of the penalty notice. The business cannot ask for a review or independent tribunal against the suspended part of the penalty after the 30 days has elapsed if HMRC subsequently demand the suspended penalty because the business failed to correct the breach.
If HMRC considers that the business has become compliant during the 12 month period, or if HMRC undertake no further interventions or compliance visits to the business within this period the 5% which has been suspended will automatically be cancelled. If however, there is any reason to issue a further penalty in this period for the same or a related breach the suspended 5% will be collected in addition to the penalty for the later breach or breaches. A suspended penalty will not be collected if HMRC identify a completely unrelated breach and issues a warning letter or penalty for this. If the penalty has been issued for multiple breaches all of them must be corrected for the suspended penalty to be cancelled. For example, a penalty is issued for failing to undertake adequate identity checks based on the risks identified in the business and for not training staff. A follow up compliance visit nine months later confirms that there have been some improvements in training and the identity checks on the customers but no controls have been put in place to identify beneficial owners. Because this is a related breach a further penalty for this breach will be due plus the 5% suspended penalty.
Despite the continued non-compliance HMRC still wants to encourage future compliance. If the business is now prepared to correct the errors and an action plan to do this can be agreed with HMRC, 5% of the second penalty will still be suspended as an incentive.
