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Suspended penalties

Suspended penalties

It has been suggested to us over the phone by an officer in 'Local Compliance Bootle' that HMRC may be limiting the extent to which it will suspend penalties, although we have yet to receive written confirmation. The oversight is a one-off as far as we are aware: a prompted disclosure following the omission by a client of about £8,000 of PAYE income in a year when she variously had three employments. She was a higher-rate taxpayer. The tax at stake is about £1,600. and the resulting penalty may be as low as £240.

As she is a non-business client, it is debatable what conditions HMRC could  put in place over procedures and future behaviour, other than: "make sure your tax return is complete and correct".  Nevertheless, it compares with earlier successes we have had in getting much larger penalties suspended in circumstances arising from careless inaccuracy by non-business clients who were prompted to disclosure by HMRC. In one case for 2009-10, the oversight amounted to more than £100,000 of post-termination income received in lieu of unpaid employer pension contributions which because of its nature the client believed had been taxed in full. A more complex scenario, but with a lot more tax (and penalty) at stake. We made a strong 'plea in mitigation' but perhaps, in that instance, we and the client were lucky. A penalty of more than £3,000 was suspended and discharged after 12 months 'good behaviour' - which itself seemed lenient, although again it was very much a one-off.    

Has anyone else come across a recent change of attitude by HMRC?    



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22nd May 2012 16:57

Suspended penalties

I noticed that, when the new penalty regime was introduced, HMRC Officers used the suspension option quite frequently. The main reason was that the regime was proving very difficult to operation. Senior Managers were unhappy at this development, and have urged Officers to issue penalties, rather than to suspend. So I do agree with your comment.

For the taxpayer, the problem is that the Officer is supposed to initiate the use of suspension. I have successfully suggested to Officers that they use suspension, however; so this is well worth doing, especially if the circumstances behind the penalty are appropriate.

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By ACDWebb
22nd May 2012 20:02


if it is one off and not something that can be checked to ensure the the rules are being followed in the future - say an erroneous PPR claim - the suspension will / can not be offered.

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