Suspension of penalties

Suspension of penalties

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A client misstated a figure on their return, HMRC queried it and an amendment was made.  HMRC charged a careless error penalty but agreed to suspend it so long as the client toes the line from here on.  Fair enough.

Except one of the conditions they have stipulated is that the client pay the penalty.  As in, the client has to sign a form agreeing that the penalty will be suspended and that they will pay the lost tax plus the penalty.  Is that right?  Surely if the penalty is suspended they shouldn't be paying it in the first place.

Or is that not how it works?  I don't want to tell the client to pay the tax and interest only for HMRC to say 'ahh you didn't pay the full amount we said so the penalty has been un-suspended!'

Replies (3)

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Stepurhan
By stepurhan
27th Nov 2013 08:20

Query HMRC

Insisting that paying a penalty is a condition of having it suspended makes no sense. I suspect a mistake in drafting the letter, and it should only refer to payment of the tax and interest, quite likely within a specific time period. I would raise a query with the officer raising the letter and ask for it to be amended accordingly. If they instead come up with a clever explanation of how a paid penalty can be considered suspended, do let us know.

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By Dr G House
27th Nov 2013 09:05

Hum

HMRC only have the tax+interest as outstanding on their site, so presumably the letter writer got carried away.

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By vince8
27th Nov 2013 09:21

Similar experience

I had something similar and dealt with it all by telephone. During the telephone conversation I persuaded the HMRC officer not to charge a penalty, based on the particular circumstances. Two weeks later the final letter arrived charging a 15% penalty. On calling again another HMRC officer read from the notes which confirmed no penalty was agreed with me. Now waiting for another letter, not a large amount but the client was not amused after I had originally told them no penalty would be charged.

Dr G House - I'm told the tax and interest is subject to one demand and the penalty notice is run later and subject to a separate demand, so it may not show up yet.

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