The following Employment Tax guidance note by Tolley in association with Philip Rutherford provides comprehensive and up to date tax information covering:
The rate of the penalty chargeable on the taxpayer is based on the behaviour of the taxpayer (in the case of PAYE penalties, the employer) and whether the error came to light from an unprompted or prompted disclosure. Once these factors have been decided, a penalty is calculated based on the potential lost revenue (PLR). The PLR is the extra tax due as a result of correcting the inaccuracy or under-assessment. See the Calculating the penalty for inaccuracies - potential lost revenue guidance note.
The behaviours are:
These behaviours are discussed further below.
The amount of the penalty can be reduced depending on whether the disclosure is prompted or unprompted and the quality of the disclosure by the taxpayer. This is discussed further in the Penalty for inaccuracies: reductions guidance note.
The penalty rates are divided into bands depending on the behaviour of the taxpayer. These bands are as follows and depend on when and how the taxpayer discloses the failure:
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