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Suspending penalties for careless inaccuracies in returns or documents

This factsheet tells you what happens when we consider whether to suspend penalties for careless inaccuracies in returns or documents. It鈥檚 one of a series of compliance factsheets. For the full list, go to www.gov.uk and search for HMRC 鈥榗ompliance checks factsheets鈥�.

If you need help

If you have any health or personal circumstances that may make it difficult for you to deal with us, please tell the officer who has contacted you. We鈥檒l help you in whatever way we can. For more information, go to www.gov.uk/get-help-hmrc-extra-support.

You can also ask someone else to deal with us on your behalf, for example, a professional adviser, friend or relative. We may however still need to talk or write to you directly about some things. If we need to write to you, we鈥檒l send a copy to the person you鈥檝e asked us to deal with. If we need to talk to you, they can be with you when we do, if you prefer.

When we can suspend a penalty

We can only suspend penalties for careless inaccuracies in returns or documents if we鈥檙e able to set at least one suspension condition that will help you avoid penalties for similar inaccuracies in the future. Each condition must be 鈥楽MART鈥�. SMART means:

• specific 鈥� it must be directly related to the cause of the inaccuracy
• measurable 鈥� you鈥檒l need to be able to show us whether you鈥檝e met the condition
• achievable 鈥� you鈥檒l need to show us that you鈥檙e able to meet the condition
• realistic 鈥� we can realistically expect that you鈥檒l meet the condition
• time bound 鈥� you must meet the condition by the end of the suspension period

These SMART conditions are in addition to the condition that you must file all your returns on time during the suspension period.

If we suspend a penalty, you will not have to pay it if you can satisfy us that you鈥檝e met all the conditions at the end of the suspension period, and not incurred another penalty within the suspension period.

When we cannot or will not suspend a penalty

We cannot suspend penalties for deliberate or deliberate and concealed inaccuracies.

We will not suspend penalties for careless inaccuracies if we鈥檙e not able to set any SMART conditions, or if we believe that it鈥檚 unlikely you鈥檒l comply with any of the suspension conditions.

If you鈥檙e liable to a penalty for a careless inaccuracy that arose because you attempted to use a tax avoidance scheme, it鈥檚 unlikely that we鈥檒l be able to suspend the penalty.

If we decide not to suspend a penalty, you can appeal against our decision. For more information about this, please read the section 鈥業f you disagree鈥�.

What you need to do before we suspend a penalty

Before we suspend a penalty, you鈥檒l need to agree conditions with us. It鈥檚 important that:

• you understand the conditions
• you can meet the conditions
• the conditions are proportionate to the size of the inaccuracy
• the conditions take your circumstances into account
• it will be clear to both you and us when you鈥檝e met the conditions

As well as agreeing specific SMART conditions to help you avoid similar inaccuracies in the future, you鈥檒l also have to agree to file all your returns on time during the suspension period.

Please think carefully about whether you can meet the conditions before you agree to them. Tell us if you鈥檙e not sure about anything. If you鈥檝e an adviser, you can also ask them for help. After you鈥檝e agreed conditions with us, we鈥檒l send you a notice of suspension. This will show the conditions and the suspension period.

How we determine the length of the suspension period

The length of the suspension period will depend on how long it鈥檒l take you to meet the specific suspension conditions. The maximum suspension period allowed by law is 2 years but normally it would be less than this.

What you need to do during the suspension period

During the suspension period, you must meet the conditions that you鈥檝e agreed to. You must also make sure that you do not send any other inaccurate returns during the period, as this may make you liable to another inaccuracy penalty. If you incur another inaccuracy penalty during the suspension period, you鈥檒l have to pay the previously suspended penalty.

What happens at the end of the suspension period

At the end of the suspension period, we鈥檒l ask you whether you鈥檝e met the conditions. We may need to check your records and ask for other evidence, to make sure that you鈥檝e met them. If we agree that you鈥檝e met the conditions, we鈥檒l cancel the penalty. If we decide that you鈥檝e not met the conditions, you鈥檒l have to pay the penalty.

You cannot appeal against this decision. However, you can apply for judicial review of our decision. But this can be expensive, so you should seek legal advice first.

If you disagree

If there鈥檚 something that you do not agree with, please tell us.

If we make a decision that you can appeal against, we鈥檒l write to you about the decision and tell you what to do if you disagree. You鈥檒l usually have 3 options. Within 30 days, you can:

• send new information to the officer dealing with the check and ask them to take it into account
• have your case reviewed by an HMRC officer who has not been involved in the matter
• arrange for an independent tribunal to hear your appeal and decide the matter

Whichever you choose, you may also be able to ask for an HMRC specialist officer to act as a neutral facilitator to help resolve the dispute. We call this Alternative Dispute Resolution (ADR).

ADR is only available for disputes that relate to particular tax areas. The officer dealing with the check will tell you if ADR is available for your dispute. For more information about appeals and ADR, read factsheets:

• HMRC1, 鈥楬M Revenue and Customs decisions 鈥� what to do if you disagree鈥�
• CC/FS21, 鈥楢lternative dispute resolution鈥�

Go to www.gov.uk and search for 鈥楬MRC1鈥� or 鈥楥C/FS21鈥�.

More information

Our privacy notice

Our privacy notice sets out the standards that you can expect from us when we ask for information or hold information about you. Go to www.gov.uk and search for 鈥楬MRC Privacy Notice鈥�.

If you are not happy with our service

Please tell the person or office you鈥檝e been dealing with. They鈥檒l try to put things right. If you are still not happy, they鈥檒l tell you how to make a formal complaint.