CH405050 - Charging penalties: suspending penalties: introduction
Source: gov.uk (2025-01-14)


This page and chapter are under review as the relevant content is also published in the guidance chapters of the Compliance Handbook (https://www.gov.uk/hmrc-internal-manuals/compliance-handbook), within Compliance checks factsheets (https://www.gov.uk/government/collections/hm-revenue-and-customs-compliance-checks-factsheets) and in Compliance checks guidance (https://www.gov.uk/guidance/hmrc-compliance-checks-help-and-support). If you use particular pages regularly, please email xxx@xxx.xx (mailto:xxx@xxx.xx) to let us know the specific content you find useful.

The purpose of suspending a penalty is to encourage and support future compliance by giving the person an incentive to improve their systems to avoid careless inaccuracy penalties in the future.

See CH405070 (https://www.gov.uk/hmrc-internal-manuals/compliance-handbook/ch405070) for a flowchart to help you arrive at the correct decision in the majority of cases.

You can only suspend Sch24 penalties for a careless inaccuracy, see CH83100 (https://www.gov.uk/hmrc-internal-manuals/compliance-handbook/ch83100).

You should always consider whether a careless penalty can be suspended.

A penalty can only be suspended where specific conditions can be set, which, if met, will improve a process or record keeping in a way that will prevent inaccuracies in the future, see CH405160 (https://www.gov.uk/hmrc-internal-manuals/compliance-handbook/ch405160).

There is also a generic condition to submit returns for all relevant taxes and duties that the person is required to make during the suspension period by the due date, see CH405155 (https://www.gov.uk/hmrc-internal-manuals/compliance-handbook/ch405155).

A penalty cannot be suspended where it is not possible to set specific conditions because the same type of inaccuracy is unlikely to happen in the future.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

You must have evidence to support your decision to suspend or not to suspend a penalty and have this decision authorised using NPPS.

To suspend a penalty you must enter the penalty into the NPPS so that the penalty is assessed and notified to the taxpayer. NPPS also issues the Notice of Suspension (NPPS3) at the same time. If that is not done the penalty cannot be reinstated if the suspension conditions are not met.

A person can appeal against
- your decision not to suspend a penalty, or
- your decision to only partly suspend a penalty, or
- any of the conditions you set.
There is no right of appeal against a decision to
- collect the penalty during the suspension period if the person becomes liable to another penalty for careless inaccuracy, or
- collect the penalty at the end of the suspension period if any of the suspension conditions have not been met.
Caseworkers should allocate suspended penalties to the Central Penalty Team (CPT) via NPPS, see CH407730 (https://www.gov.uk/hmrc-internal-manuals/compliance-handbook/ch407730). The CPT will check that the suspension conditions have been complied with, see CH405351 (https://www.gov.uk/hmrc-internal-manuals/compliance-handbook/ch405351).

Where an inaccurate return is submitted during the suspension period, but the inaccuracy is not discovered until after the penalty has been cancelled, we can not bring the penalty back into charge. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Technical guidance starts at CH83100 (https://www.gov.uk/hmrc-internal-manuals/compliance-handbook/ch83100).