A4.567B Harmonised penalties—common concepts: potential lost revenue
'Potential lost revenue' is a key part of the harmonised penalty regime for:
• inaccuracy in a document (see A4.530), and
• failure to notify liability (see A4.540)
Broadly speaking, the potential lost revenue (PLR) is the amount of revenue which would have been lost to the Exchequer if the taxpayer's misconduct had not come to HMRC's attention. It is the measure to which the applicable penalty percentage is applied to arrive at the penalty chargeable before any reductions.
The late filing penalty provisions do not refer to PLR as such but the tax-geared penalties operate in a not dissimilar way. The percentage specified by the statutory provisions is applied to the tax liability that would have been shown in the return. This is defined as the amount which, if a complete and accurate return had been delivered on the filing date, would have been shown to be due or payable by the taxpayer for the period to which the return relates (see A4.552).
Late payment penalties (see A4.560) are not based on PLR, but require the amount of tax outstanding at the due date to be ascertained and a specified percentage applied to it.
Potential lost revenue (PLR) for inaccuracy in a document
The calculation of PLR depends on whether there is a single or multiple inaccuracies and the effect of those inaccuracies on the taxpayer's liability1. The basic question is to ask what tax was at stake because of the error(s). It follows that if