SCIG13415 - Statutory basis for closing an investigation: interest determinations and penalty proceedings: when to make a penalty determination

Whenever possible, formal penalty action should be taken at the same time as formal assessing action, to ensure that appeals against both can be heard together.

EM5207 and EM5207a, and CH285460 and CH285470 explain when you should consider formal penalty action, and the steps you should have taken first.

EM5207b and CH285480 (points three to six) set out a timetable for warning the taxpayer of penalty action, getting approval and issuing the penalty determination. This has been designed for operation in Local Compliance, and does not apply in SI. The comparative complexity of SI cases means that you should not set yourselves an arbitrary date for completing the process.

However, it is important that you avoid delay wherever possible, and that you have explained your proposed penalties - including your view of the evidence - to the taxpayer and sought their agreement, before you make a formal penalty assessment.

SCIG14300 contains guidance about penalties in the context of settlement by agreement. Note that much of this also applies to cases settled formally.