TOBCSC8100 - Penalty notices: Factors to take into consideration

The primary legislation, section 7C(2) of the TPDA, sets out nine factors that shall be considered in calculating the amount of any penalty. These are also reproduced in section 7.5 of Notice 477. The factors are:

• the nature and extent of the breach of the manufacturer’s duty not to facilitate smuggling;
• action the manufacturer has taken to ensure that they are complying with their duty;
• the content of the manufacturer’s policy for avoiding facilitating smuggling;
• the extent to which the TM has complied with his policy for avoiding facilitating smuggling;
• action the manufacturer has taken following any notification by us to them of specified brands, countries and persons;
• whether the manufacturer has provided us with the information we have requested relating to specified brands, countries and persons;
• the number, size and nature of the notified seizures of the manufacturer’s tobacco products;
• the loss of revenue by way of duty or VAT in respect of the notified seizures; and
• any other matter we consider relevant (this is explained more fully at the end of the next section).

The method of calculating the penalty has been designed to demonstrate clearly how each of these factors will be applied. Additionally, the following principles have been adopted:

• any calculated penalty must be proportionate to the level of non- compliance involved. It is worth reading the first-tier tribunal Judgement in the case of BAT (TC05659);
• any method must be straightforward and transparent;
• a balance needs to be achieved between structure and discretion in order that the method can be successfully defended at tribunal;
• the same conduct may be taken into account under one or more matter in section 7C(2). It is though inappropriate to penalise the same conduct repeatedly simply because it falls under the different headings.