The following Personal Tax guidance note by Tolley in partnership with Philip Rutherford provides comprehensive and up to date tax information covering:
Under the penalty legislation introduced by FA 2007, Sch 24, where an inaccuracy has occurred on a return or other document which leads to an understatement of tax, the taxpayer is exposed to a penalty.
The rate of the penalty is based on the behaviour, of the person. This rate is then applied to the potential lost revenue (PLR), which is the extra tax due as a result of correcting the inaccuracy or under-assessment, to calculate the amount of the penalty due.
This is discussed in more detail in the Penalty rates and structure for inaccuracies in returns, Calculating the penalty for inaccuracies in returns - behaviour of the taxpayer and Calculating the penalty for inaccuracies - potential lost revenue guidance notes.
The rate of penalty can be reduced if the taxpayer comes forward to inform HMRC about the inaccuracy and further by the nature and quality of the information and documentation provided to HMRC. This is known as the quality of disclosure and is discussed in this guidance note.
A disclosure is unprompted if it is made at a time when the taxpayer has no reason to believe that HMRC has discovered the inaccuracy or under assessment.
Otherwise, a disclosure is prompted.
A disclosure must fall into one of these categories. There is both a smaller range of potential penalties and lower highest possible penalty for voluntary disclosures.
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login