SDLTM86580 - Compliance: Penalties

Contract settlements and abatement: Structure

At the end of the enquiry the compliance caseworker must use the penalty abatement structure set out in the following paragraphs to calculate the penalty element of the offer.

All penalty calculations must be approved by a Grade 6 officer before any discussion with the purchaser or agent. The calculation must set out clearly the following

• offence/s
• maximum penalty and statutory authority
• abatements, description of reasons for each abatement
• amount of offer sought

This structure is intended to give considerable scope for discretion. It allows a large variety of mitigating or aggravating features to be taken into account.

It is based upon a maximum penalty of 100% of the culpable tax lost, subject to abatements, which recognise three elements in the enquiry

• the extent of the purchaser's disclosure of irregularities
• the extent of their co-operation throughout the enquiry
• the seriousness of the offences which are established by the enquiry

The net percentage should be applied to the culpable tax not time-barred for penalty proceedings.

For ease of explanation the guidance uses multiples of 5% abatement and loadings.

Culpability

The nature of the offence may not be the same for all transactions covered by the enquiry. For some transactions there may have been a failure to notify chargeability or a late land transaction return. For others there may have been deliberate omissions or understatements of value. See SDLTM86390.