HMRC Wrongdoing Penalties

What Is A Wrongdoing Penalty?

Anthony Galvin & Rebecca Hudson

Anthony Galvin & Rebecca Hudson

Directors, Altion Law

A wrongdoing penalty is a penalty issued by HMRC where they feel that a wrongdoing has been committed. This ‘wrongdoing’ action results in funds due to the Crown, not having been paid. Theses funds could including Excise Duty or VAT sums.

In certain circumstances where a wrongdoing penalty has been issued to a business, HMRC can cross the Liability Over To Directors or a partner personally. It is important to seek legal advice as soon as you receive any correspondence regarding an assessment or penalty from HMRC. Early action may be able to prevent the matter from escalating.

Altion Law are specialists in the area of HMRC penalties. For a confidential free discussion, call us today on 01908 414990,  alternatively email us at or complete our Free Enquiry Form and we will call you back.

Will I Have To Pay?

If the Wrongdoing Penalty is not disputed by you, then HMRC will deem that the sums are accepted as due by you and will pursue you for these sums. HMRC may also take other actions as well.  They could consider crossing any deliberate wrongdoing penalty across to directors and partners personally.  So it is important to understand the implications of any wrongdoing penalties issued as soon as possible.  This will allow you to understand the full picture.

It is vitally important to seek legal advice at the earliest stage.   To ensure that any evidence or information in dispute of a sum claimed by HMRC is presented accurately and as quickly as possible. Failure to take the correct action may have serious consequences for your business.

A wrongdoing penalty could also have Criminal Implications.  As there could be criminal implications, any notice of intention to issue a wrongdoing penalty should include a Human Rights Act notice setting out that you do not have to answer HMRC’s questions.

HMRC Wrongdoing Penalties

HMRC Wrongdoing Penalties


Early Legal Advice Is Vital

It is vitally important that you seek legal advice at the earliest opportunity. This is to ensure you are fully aware of the claims being made and the implications. A wrongdoing penalty can be issued in addition to an HMRC Assessment. In certain circumstances a wrongdoing penalty issued to a business can also be crossed over to a director/ partner personally.  So, it is vitally important that legal advice is obtained as soon as possible.

For a confidential free discussion, call us today on 01908 414990,  alternatively email us at or complete our Free Enquiry Form and we will call you back.

“I cannot be thankful enough to Rebecca and Altion Law for the service and help I received, through a very difficult time. After being refused the AWRS Rebecca and Altion Law helped over turned HMRCs decision successfully”.


Can I Respond To The Accusations?

HMRC will usually write to you to advise of their intention to issue a wrongdoing penalty prior to issuing it  They will set out their reasons, as well as asking for information or comments from you.

It is important to seek advice as soon as possible to ensure that you understand the position in full before you respond. If information is disclosed, it could reduce any penalty issued.  However, it may also prejudiced your position, so it is important the full implications of what is involved are understood.

Are There Any Circumstances Where HMRC Will Not Charge A Penalty For Wrongdoing?

HMRC will not usually charge you a penalty for a VAT or Excise Wrongdoing if all of the following apply:

  • You have a reasonable excuse for the wrongdoing
  • The wrongdoing was not deliberate
  • You notified HMRC without unreasonable delay after your reasonable excuse ended

How Is The Penalty Calculated?

HMRC will take various matters into account when calculating a wrongdoing penalty.  These include the amount of Potential Lost Revenue (PLR) and the behaviour behind the wrongdoing.

When assessing the behaviour HMRC consider whether the wrongdoing was:

  • Non-deliberate
  • Deliberate
  • Deliberate and concealed
  • Whether the disclosure was prompted by HMRC or volunteered.

Where a deliberate wrongdoing penalty is suspected, HMRC may start to pay closer attention to this business. Where a deliberate wrongdoing penalty is issued to a business, this could also be crossed over to a director or partner personally in certain circumstances.  So, it is important to understand what HMRC are claiming and how this could impact you in the future.

What If After Considering My Information, A Wrongdoing Penalty Is Still Issued?

Once a Wrongdoing Penalty is formally raised, you are able to request a review of the decision.   The matter will be considered by an alternative HMRC officer which was not involved in the original issuing of the assessment. That officer will consider the matter in full before providing their review decision to you. Be aware that the time frame to request a review is usually 30 days from the date of the original decision.  This is also an opportunity to clarify your position or submit further information that may impact the outcome. Many companies just ask for a review without first taking legal advice as to how to best use this review opportunity. Once requested, HMRC usually have 45 days to provide their review decision.

What If On Review The Decision Remains The Same?

If you still dispute the outcome once the review decision has been issued, you can appeal the review decision to the Tax Tribunal. The Tax Tribunal is similar to a court however the procedure is less formal.

Any appeal to the Tax tribunal must be made within 30 days of the date of the written review decision issued to you.

There may also be circumstances where you can appeal an original wrongdoing penalty decision straight to the Tax Tribunal and avoid requesting a review by an alternative HMRC officer. It is important to seek legal advice on your matter as soon as possible.  As the costs and time frame may well affect your decision in how to push forward.

Altion Law are specialists at advising and representing parties who have received HMRC assessments and wrongdoing penalties from HMRC. Altion Law can advise whether:

  • You are even the correct party for HMRC to pursue;
  • There are any additional risks, such as further assessments or penalties against company directors personally.
  • There are any defences available to you.

Make An Enquiry Today

For a confidential free discussion, call us today on 01908 414990,  alternatively email us at or complete our Free Enquiry Form and we will call you back.

“Professional and honest service who certainly know their business. Kept informed all of the time and it was a smooth successful process”.