CH170600 - Special reduction: What are special circumstances

We can only make a special reduction where there are special circumstances. You must not give a special reduction without authority from the Specialist Technical Team to do so, see CH175000.

Penalty legislation provides for common circumstances and these are therefore taken into account in establishing the liability to and/or level of a penalty.

Special circumstances

Special circumstances are factors that are not otherwise provided for in the legislation. So, for example, they will not include

• matters that amount to a reasonable excuse in the case of failures, or reasonable care in the case of inaccuracies, or
• the usual factors - telling, helping and giving access - which you take into account when you consider reduction of a penalty for quality of disclosure.

Special circumstances should be clearly recognisable as such and are completely separate from the other considerations mentioned in the bullets above. See CH170800 examples 1 and 2 for examples of situations where special circumstances may exist.

Special circumstances are either

• Relevant to the penalty and sufficiently special that HMRC considers it right to reduce the penalty; or
• Where the strict application of the penalty law produces a result that is contrary to the clear compliance intention of that penalty law.

To be special any particular circumstance may or may not be specific to the individual taxpayer but it must be relevant to the penalty under consideration.

However, you must not give a special reduction without authority from the Specialist Technical Team to do so.

Application of penalty law produces a result that is contrary to the clear compliance intention of that penalty law

We may reduce penalties for special circumstances where imposing the penalties would be contrary to the clear compliance intention of the penalty law. See CH170800 example 3 for an example of special circumstances that may exist where the strict application of the penalty law produces a result that is contrary to the clear compliance intention of the penalty law.

However, we will not reduce penalties through special reduction where such a reduction would be contrary to the clear compliance intention of the penalty regime. In particular, we will not do so on the basis that the underlying tax liability has been paid.

Note: There is specific guidance for self assessment returns. If the person does not meet SA criteria, whether or not HMRC failed to act on information supplied confirming that a self assessment return should not have been issued, you should cancel the late filing penalties in accordance with the operational guidance.