EM4707 - Penalties: Failure to Comply with SA Information Notices: £30 or Less - Subsequent Action

This guidance only applies to information notices issued on or before 31 March 2009.

After 31 March 2009 you cannot issue notices under TMA70/S20, TMA70/S19A, FA98/SCH18/PARA27 or TMA70/SCH1A/PARA6. You must instead use the information powers in FA08/SCH36, see CH20000+

TMA70/S97AA(2)

FA98/SCH18/PARA 29(2)

If the information required by the notice has still not been received 30 days after the date of issue of the first tranche of daily penalties, you should write a further letter to the taxpayer, copied to the agent, reminding them of

  • the need to comply
  • the penalties that have already been imposed, and
  • the possibility of further penalties.

You should encourage the taxpayer to get in touch with you to explain the reasons for the failure and provide whatever help you can towards resolving any difficulties.

At the same time you should obtain from the Debt Management Office details of the initial and daily penalties that remain unpaid and the stage reached in the recovery process.

You should again review the case with your Compliance Manager to decide whether to seek authority to proceed with further penalties.

At this stage the S100(1) authorised officer (Grade 6) EM5320+ and EM4702 will need to play an active part in judging whether the imposition of further penalties is proportionate to the risks involved in the enquiry. Factors to be taken into consideration will include

  • what contact has been made with the taxpayer and what explanations have been given for not providing the information.
  • whether the taxpayer has paid the penalties. If they have been paid, is it because the taxpayer regarded it as preferable to supplying the information? Is there something to hide?
  • why the taxpayer has not paid the penalties, if they are unpaid. Is the taxpayer burying his or her head in the sand? Is the taxpayer deliberately avoiding HMRC or unable to cope and in need of help?
  • whether the penalties are unpaid because no effective recovery action has been taken. But if recovery has not so far been pursued, it may not be the most effective option to continue with additional penalties.
  • the taxpayer’s history and, if appropriate, the situation for the post enquiry years. What implications would there be for other years if the enquiry were closed at this stage?

Where the overall risks are small, or even in larger cases where you have enough information to arrive at a reasonable conclusion EM3846, you may decide that the best course of action would be to issue a closure notice. The taxpayer will have the right of appeal against

  • any conclusion stated in or amendment made by a closure notice, or
  • any HMRC amendment made on the basis of a closure notice.

If further daily penalties are decided upon, follow the general advice at EM4706.

Assuming the first tranche of daily penalties was at a rate less than £30, you will probably find it appropriate to increase the rate for subsequent determinations, but still within the £30 limit.

The total penalties should be viewed in the context of the enquiry. Bear in mind that the primary purpose of daily penalty action is to secure the information needed for the enquiry and not to punish the taxpayer. At some stage, in the face of sustained non compliance, a decision may have to be taken to bring matters to a head by closing the enquiry and amending the self assessment. If the taxpayer appeals, you should be able to satisfy the tribunal that it was a reasonable exercise of your judgement to arrive at your conclusion (even though estimated), having regard to the taxpayer’s apparent acceptance of the mounting daily penalties.