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The purpose of penalties is to encourage taxpayers to comply with their tax obligations, to act as a sanction for those who do not, and to reassure those who do that they will not be disadvantaged by those who do not. Penalties are not used as a revenue-raising mechanism.<\/p>

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Parliament determines the laws relating to tax and to whom they apply. HMRC apply those laws fairly and do not discriminate between different taxpayers or size of business.<\/p>

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HMRC can apply a large number of different penalties, but they break down into three broad areas:<\/p>

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