Penalties and interest: Remission
When are penalties remitted?
The tax laws allow us to remit penalties only in very limited circumstances. Remission means the penalties are legally waived and are no longer payable.
There are two grounds for remission:
- Reasonable cause - we may remit a penalty if the reason for late filing, non-electronic filing or late payment was beyond your control. This means that it must be reasonable for an average person in the same position not to have complied. The term "reasonable" must be applied to the event or circumstance.
- Collection of highest net revenue over time - Inland Revenue is required by law to collect, over time, as much revenue as possible, ideally through voluntary compliance by all taxpayers. In some circumstances the remission of penalties will be consistent with this legal duty, eg where a penalty is charged because of:
- a genuine error
- a "one-off" situation, or
- incorrect advice from us that directly resulted in the non-compliance.
If you're applying for remission this can be done in writing or by calling us. Your application will be considered only when the return has been filed and/or the tax has been paid. You must state the reasons for the late payment or filing, and be prepared to produce any information we need to consider your request.
Date published: 30 Aug 2006
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