If you fail to comply with an HMRC information notice, or deliberately obstruct a tribunal approved inspection, HMRC can charge a £300 penalty under paragraph 39 of Schedule 36 to Finance Act 2008, then daily penalties of up to £60 for each day the failure continues. In serious cases the Upper Tribunal can add a tax related penalty based on the tax at risk, and inaccurate information can cost up to £3,000 per inaccuracy. No penalty is due if you have a reasonable excuse or comply within extra time HMRC has allowed.

What triggers a penalty?

Paragraph 39(1) applies to a person who:

  • fails to comply with an information notice; or
  • deliberately obstructs an HMRC officer in the course of an inspection that the tribunal has approved.

Failing to comply includes concealing, destroying or otherwise disposing of a document in breach of paragraph 42 or 43, which protect documents named in a notice and documents HMRC has said are likely to be requested. HMRC’s guidance at CH26220 says a person fails to comply if the information or documents have not been provided by the end of the period stated in the notice. Where only some of the material has arrived, the officer considers whether what has been provided is enough to finish the check; if the missing items are significant, the notice has not been complied with.

The same penalty rules apply to all Schedule 36 notices, including taxpayer notices, third party notices and financial institution notices. How notices are issued and challenged is covered in our guide to Schedule 36 information notices. Record keeping failures are a separate regime, covered in HMRC record keeping penalties.

How much are the initial and daily penalties?

The initial penalty is a fixed £300 (paragraph 39(2)). If the failure or obstruction continues after that penalty has been imposed, paragraph 40 allows further penalties of up to £60 for each later day it continues. The Treasury can raise these sums by regulations to reflect inflation (paragraph 41), but the amounts in force remain £300 and £60.

HMRC’s guidance at CH26680 says a daily rate at the lower end of the range will probably be enough for a first assessment in most cases, and lists the factors officers weigh in choosing the rate:

  • the amount of tax that appears to be at stake;
  • the nature and extent of any obstruction, or of the information and documents requested;
  • any problems the person faces in obtaining them;
  • the degree of cooperation so far; and
  • the person’s general compliance history.

Daily penalties run from the day after the initial penalty was assessed (CH26700), and HMRC says they should be assessed regularly so that a modest daily rate does not build into one large demand (CH26660). They should not be charged once the notice has been complied with. Where a document has been destroyed, the failure cannot be put right, so HMRC’s guidance says daily penalties are inappropriate and a tax related penalty should be considered instead.

What is the increased daily penalty?

Paragraph 49A applies only to a failure to comply with a notice under paragraph 5, an identity unknown notice used to obtain information about people whose identities HMRC does not know. If a daily penalty has been assessed, the failure continues for more than 30 days after that assessment was notified, and the person has been warned, HMRC can apply to the First tier Tribunal for an increased daily penalty. The tribunal sets the start date and a new maximum of up to £1,000 a day, having regard to the likely cost of complying, any benefit to the person of not complying, and any benefit to anyone else from the non compliance. Paragraph 47(2) removes the right to appeal against the amount of an increased daily penalty. HMRC’s guidance at CH26705 says this applies to failures beginning on or after 1 April 2012.

What is the tax related penalty?

This is the “tax geared” penalty in paragraph 50, and it is decided by the Upper Tribunal rather than HMRC. It can apply where:

  1. the person is liable to the £300 penalty;
  2. the failure or obstruction continues after that penalty is imposed;
  3. an officer has reason to believe that, because of the failure or obstruction, the tax the person has paid or is likely to pay is significantly less than it would otherwise have been; and
  4. an officer applies to the Upper Tribunal within 12 months of the relevant date, and the tribunal decides an additional penalty is appropriate.

The relevant date is generally when the person became liable to the £300 penalty. Where the notice could be appealed, it is the latest of that date, the end of the time for appealing the notice and the date any appeal was decided or withdrawn. The Upper Tribunal sets the amount, having regard to the tax that has not been, or is not likely to be, paid, and it is in addition to the initial and daily penalties.

HMRC’s guidance at CH26720 says it will only seek this penalty in the most serious cases where the tax at risk is substantial, and that an authorised officer must make the application. Daily penalties do not have to be charged first (CH26740). In one of HMRC’s own examples at CH26760, a company with an estimated £2.5 million of tax and National Insurance at risk paid £300 and then £1,800 of daily penalties at £60 a day, but still did not produce the documents, so HMRC sought a tax related penalty.

What about inaccurate information or destroyed documents?

Under paragraph 40A, a person who provides inaccurate information or a document containing an inaccuracy in response to a notice is liable to a penalty of up to £3,000 for each inaccuracy if:

  • the inaccuracy is careless or deliberate;
  • the person knew of it when providing the information but did not tell HMRC; or
  • the person discovers it later and fails to take reasonable steps to tell HMRC.

HMRC’s guidance at CH26780 says the maximum would only be considered for very serious cases of deliberate inaccuracy.

Concealing or destroying a document can also be a criminal offence where the notice was approved by the tribunal, or HMRC had said in writing that it intended to seek approval (paragraphs 53 and 54). On conviction on indictment the maximum is two years’ imprisonment, a fine, or both (paragraph 55). A person convicted is not also liable to a penalty for the same thing (paragraph 52).

When is no penalty due?

Two defences apply to the £300 and daily penalties:

  • Extra time. If an officer allowed further time and you complied within it, there is no penalty (paragraph 44). Ask for more time in writing before the deadline.
  • Reasonable excuse. Paragraph 45 removes liability if you satisfy HMRC, or the tribunal on appeal, that you had a reasonable excuse. Lack of money is not an excuse unless caused by events outside your control. Relying on someone else, such as an adviser, is not an excuse unless you took reasonable care to avoid the failure. If the excuse ends, you must put things right without unreasonable delay.

HMRC’s factsheets give serious illness, the death of someone close, and documents lost in a fire or flood as examples. Even where HMRC accepts an excuse, it will still ask for the information within an agreed time.

How are penalties assessed, appealed and paid?

  • Assessment. HMRC must notify any penalty it assesses (paragraph 46). A £300 or daily penalty must be assessed within 12 months of the date the person became liable or, if the notice could be appealed, within 12 months of the latest of that date, the end of the appeal period and the date any appeal was decided or withdrawn. An inaccuracy penalty must be assessed within 12 months of HMRC learning of the inaccuracy and within six years of the liability arising.
  • Appeal. You can appeal against the decision that a penalty is payable and against its amount (paragraph 47). The appeal must be in writing to HMRC, state the grounds, and be made within 30 days of the date the penalty notification was issued (paragraph 48). The tribunal can confirm or cancel the penalty, or substitute a different amount. Our guide to statutory review and the tax tribunal explains the process.
  • Payment. A penalty is payable within 30 days of the notification or, if you appeal, within 30 days of the appeal being decided or withdrawn (paragraph 49).

A worked example

Illustration only. A sole trader under enquiry receives a taxpayer notice on 1 March requiring his bank statements and sales records within 30 days. Nothing arrives.

Date Event Penalty
20 April Initial penalty assessed £300
20 May Daily penalties assessed at £20 a day for 21 April to 19 May (29 days) £580
5 June Documents provided in full None further

The total is £880. HMRC’s own example at CH26700 shows no daily penalty being charged for the days between the last daily assessment and full compliance. The penalties are separate from any tax and inaccuracy penalties that follow when the enquiry closes; see the HMRC penalties table for how the regimes fit together.

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Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.