IEIM750030 - Higher Penalties Where £5,000 is Inappropriately Low

In exceptional circumstances, and having considered all the relevant facts and circumstances, HMRC may consider that a penalty of up to £5,000 is inappropriately low. This would typically only occur where there is a failure which is deliberate, which has serious consequences, or where a person repeatedly fails to comply with their obligations, and a larger penalty is needed to deter future non-compliance. In such circumstances, HMRC may apply to the First Tier Tribunal (FTT) for a penalty to be charged under regulation 13(i)(a)(ii) instead of the default penalty under regulation 13(1)(a)(i). The FTT may determine the amount of such a penalty, up to £600 per day for the duration of the failure (see IEIM750040). If the FTT considers that the total amount of a penalty of £600 per day is inappropriately low, having regard to all the facts and circumstances, the FTT may increase the penalty to such amount as it deems appropriate, not exceeding £1 million in total.

HMRC may only apply to the FTT to charge higher penalties in the case of a failure to report under regulations 3(2) or 7(2), a failure to notify where legal professional privilege applies under regulation 5(2) or a failure to provide information under regulation 11. If an officer of HMRC is considering applying to the FTT to charge a higher initial penalty, the officer should first consult with the Exchange of Information policy team in Business, Assets and International.