TOBCSC8050 - Penalty notices: When should a penalty notice be issued?

If there is sufficient evidence, following the six-month initial notice period, that a tobacco manufacturer has failed in their duty not to facilitate smuggling, a penalty notice should be issued. LB are responsible for issuing the notice. The decision to issue it will be informed by Tobacco Policy. The penalty notice must be in writing and contain the following information and explanation of why the notice has been issued:

• the amount of the penalty imposed;
• a summary of the issue highlighted in the initial notice and HMRC’s response;
• how the penalty has been calculated;
• why HMRC have concluded that there is no reasonable excuse for the acts or omissions which are the source of concern;
• details of the procedure for appealing the penalty notice.

It is essential that only matters directly related to issues clearly identified in the Initial Notice and matters referred to under section 7B(5) are taken into consideration when raising the penalty notice. If new concerns are identified during the initial notice period which would justify issuing a further Initial Notice, then they should be dealt with separately, through the issue of a second Initial Notice. This will only be appropriate in exceptional circumstances. (Please see comments regarding issuing a second initial notice during the 6 month warning period in TOBSC7150).

It is vital that Tobacco Policy, the LB Tobacco Sector Lead and the LB TASCM are in agreement that a penalty notice should be issued. Solicitors should also be consulted at an early stage to ensure that they are satisfied that the content of the penalty notice corresponds directly to the issues raised in the initial notice. The initial notice should not be issued before solicitor’s advice has been sought.

TPDA provides for a maximum penalty of up to £5 million. The following section provides a guide for determining the actual amount of any penalty.