SDLTM86540 - Compliance: Penalties

Contract settlements and abatement: Approval required

Where a case for a tax-geared penalty determination is submitted to a Grade 6 officer the caseworker should set out their views on the amount of penalties to be sought following the abatement structure (This text has been withheld because of exemptions in the Freedom of Information Act 2000). See SDLTM86580.

The compliance caseworker should avoid suggesting, or implying, that the purchaser’s refusal to make an offer, or to increase an offer to an acceptable amount, should result in the determination of a higher penalty than would have been sought in a negotiated offer.

Such refusal is not in itself a lack of co-operation. Purchasers are entitled to follow the statutory appeal procedures for determining tax, interest and penalties and should not be penalised for doing so.

In considering the penalty abatement for co-operation you must look at the circumstances of each case. In particular a purchaser who has co-operated well throughout an enquiry but who genuinely disputes the imposition of a penalty or the amount sought still qualifies for a high abatement for co-operation.

Raising penalty determinations should be considered at an early stage in an enquiry where

• penalty time limits are in danger of expiring. See SDLTM86370
• it is thought that there is a serious risk that the purchaser may leave the country permanently or remove his or her assets abroad

The Grade 6 officer will advise on

• the proposed penalties
• suitable wording for the penalty determinations
• the approach to be taken to any appeal and resultant Commissioners’ hearings.

It must be ensured that, on making a determination, a covering letter is also issued. This should provide the purchaser with sufficient information to enable them to decide whether or not to appeal against the determination.

To the extent that these matters are not set out in the notice of penalty determination itself, the purchaser should be informed of

• the penalty sought
• the statutory provision that imposes the penalty
• the facts which HM Revenue & Customs allege give rise to the penalty

If the points have been adequately covered in previous correspondence, then this should be referred to in the covering letter.