MLR1PP9450 - Penalties Guidance: Method 2: The separate or multiple penalty method

There are some circumstances when it will be more transparent to calculate a separate penalty for each breach. These will include:

• When there are distinct and unrelated breaches
• Where the culpable turnover for each breach is distinct
• When the relevant period is different for each breach
• (This text has been withheld because of exemptions in the Freedom of Information Act 2000)

When this is the most appropriate method of calculating the penalty, in all but the most complex cases, the steps in the smart guidance in MLR1PP14350 will take Officers through the process of calculating the penalty. This should be used together with the calculation sheet in MLR1PP14500 

Alternatively, both businesses and Officers can follow the steps listed below:

Step 1 - Calculate the penalty cap. This will be the maximum penalty and it may not be necessary to calculate an additional starting penalty. See MLR1PP9150 

Step 2 - Calculate the culpable turnover for MSBs and HVDs following the guidance in Section MLR1PP8500 

Or, calculate the scale charges for TCSPs or ASPs following the guidance in Sections MLR1PP8800 to MLR1PP9010 

Care must be taken to ensure that when there are multiple breaches, specific clients are only counted for once, even if they were exposed by separate breaches.

Step 3 - Add an apportioned amount of the minimum starting penalty (£5,000) to each separate penalty. So if, for example, there were two breaches, it would be £2,500, or four breaches, it would be £1,250.

Step 4 - If the business is a TCSP or ASP you will need to establish if the additional scale charge is applicable following the guidance in MLR1PP8900 

Where this is applicable it should be apportioned between the different penalties on the same basis as the minimum penalty in Step 3.

Step 5 - Then add together the separate penalties for each breach. Each will consist of a proportion of the minimum penalty, plus the individual additional penalty. This will result in a figure which is the same as the uncapped total starting penalty would be, if a single penalty was going to be calculated.

Step 6 - If the maximum penalty is less than the total of the separate penalties from Step 5, calculate the amount by which the total needs to be reduced to take it down to the maximum penalty. For example, if two penalties were £6,000 and £10,000, and the cap or maximum penalty was £12,000, the total of £16,000 has to be reduced down to £12,000, which is a reduction of £4,000.

Step 7 -Then apportion the reduction between the individual penalties, for example -£4,000 =

25% of £16,000. (4,000 / 16,000 X 100 = 25)

25% of £10,000 = £2,500

25% of £6,000 = £1,500

The £10.000 penalty is reduced by £2,500 to £7,500

The £6,000 penalty is reduced by £1,500 to £4,500

The total has been reduced to £12,000, the penalty cap. This is the maximum penalty.

Step 8 - Any allowable behaviour based percentage reductions, or any penalty suspension, will be applied to each penalty separately See MLR1PP10000 

The same percentage reductions must be applied to each separate penalty, and will reflect the overall behaviour the business has demonstrated.

Different behaviour based reduction rates must not be applied to each penalty separately.

(This text has been withheld because of exemptions in the Freedom of Information Act 2000)