SCHEDULES
SCHEDULE 24Penalties for errors
Part 3Procedure
Assessment
13
1
Where P becomes liable for a penalty under paragraph 1 or 2 HMRC shall—
a
assess the penalty,
b
notify P, and
c
state in the notice a tax period in respect of which the penalty is assessed.
2
An assessment—
a
shall be treated for procedural purposes in the same way as an assessment to tax (except in respect of a matter expressly provided for by this Act),
b
may be enforced as if it were an assessment to tax, and
c
may be combined with an assessment to tax.
3
An assessment of a penalty under paragraph 1 must be made within the period of 12 months beginning with—
a
the end of the appeal period for the decision correcting the inaccuracy, or
b
if there is no assessment within paragraph (a), the date on which the inaccuracy is corrected.
4
An assessment of a penalty under paragraph 2 must be made within the period of 12 months beginning with the end of the appeal period for the assessment of tax which corrected the understatement.
5
For the purpose of sub-paragraphs (3) and (4) a reference to an appeal period is a reference to the period during which—
a
an appeal could be brought, or
b
an appeal that has been brought has not been determined or withdrawn.
6
Subject to sub-paragraphs (3) and (4), a supplementary assessment may be made in respect of a penalty if an earlier assessment operated by reference to an underestimate of potential lost revenue.
Suspension
14
1
HMRC may suspend all or part of a penalty for a careless inaccuracy under paragraph 1 by notice in writing to P.
2
A notice must specify—
a
what part of the penalty is to be suspended,
b
a period of suspension not exceeding two years, and
c
conditions of suspension to be complied with by P.
3
HMRC may suspend all or part of a penalty only if compliance with a condition of suspension would help P to avoid becoming liable to further penalties under paragraph 1 for careless inaccuracy.
4
A condition of suspension may specify—
a
action to be taken, and
b
a period within which it must be taken.
5
On the expiry of the period of suspension—
a
if P satisfies HMRC that the conditions of suspension have been complied with, the suspended penalty or part is cancelled, and
b
otherwise, the suspended penalty or part becomes payable.
6
If, during the period of suspension of all or part of a penalty under paragraph 1, P becomes liable for another penalty under that paragraph, the suspended penalty or part becomes payable.
Appeal
15
1
P may appeal against a decision of HMRC that a penalty is payable by P.
2
P may appeal against a decision of HMRC as to the amount of a penalty payable by P.
3
P may appeal against a decision of HMRC not to suspend a penalty payable by P.
4
P may appeal against a decision of HMRC setting conditions of suspension of a penalty payable by P.
16
An appeal may be brought to—
a
the General Commissioners, in so far as the penalty relates to direct tax, or
b
a VAT and duties tribunal, in so far as the penalty relates to VAT.
17
1
On an appeal under paragraph 15(1) the appellate tribunal may affirm or cancel HMRC's decision.
2
On an appeal under paragraph 15(2) the appellate tribunal may—
a
affirm HMRC's decision, or
b
substitute for HMRC's decision another decision that HMRC had power to make.
3
If the appellate tribunal substitutes its decision for HMRC's, the appellate tribunal may rely on paragraph 11—
a
to the same extent as HMRC (which may mean applying the same percentage reduction as HMRC to a different starting point), or
b
to a different extent, but only if the appellate tribunal thinks that HMRC's decision in respect of the application of paragraph 11 was flawed.
4
On an appeal under paragraph 15(3)—
a
the appellate tribunal may order HMRC to suspend the penalty only if it thinks that HMRC's decision not to suspend was flawed, and
b
if the appellate tribunal orders HMRC to suspend the penalty—
i
P may appeal to the appellate tribunal against a provision of the notice of suspension, and
ii
the appellate tribunal may order HMRC to amend the notice.
5
On an appeal under paragraph 15(4) the appellate tribunal—
a
may affirm the conditions of suspension, or
b
may vary the conditions of suspension, but only if the appellate tribunal thinks that HMRC's decision in respect of the conditions was flawed.
6
In sub-paragraphs (3)(b), (4)(a) and (5)(b) “flawed” means flawed when considered in the light of the principles applicable in proceedings for judicial review.
7
Paragraph 14 (see in particular paragraph 14(3)) is subject to the possibility of an order under this paragraph.