A4.567C Harmonised penalties: common concepts—disclosure
Disclosure is a key part of the harmonised penalty regime for:
• inaccuracy in a document (see A4.530)
• failure to notify liability (see A4.540) and
• late filing of returns (see A4.550)
In each case, a tax-geared penalty taking the form of a percentage will be reduced if the taxpayer discloses the default (ie the inaccuracy or failure) to HMRC. An unprompted disclosure attracts a greater reduction than one which is prompted. The concepts are prompted and unprompted disclosure is considered below.
There are limits to the reductions that can apply to each of the penalty levels for both prompted and unprompted disclosures. Thus the reduction can never reduce the penalty percentage below a statutory minimum. The minimum penalty percentage in each case is shown in the tables at A4.533 (inaccuracy in a document), A4.541 (failure to notify liability) and A4.555 (late filing of returns). Where the penalty chargeable is higher because the default involves an offshore matter or offshore transfer, the statutory minimum after taking account of disclosure is increased accordingly; see the tables at A4.575A for each of the three types of penalty.
The maximum reduction will not always be granted; the reduction will be on a sliding scale and therefore will be a question of judgment.
Where the default involves an offshore matter or offshore transfer, there are additional obligations which a taxpayer must meet if they are to be treated as making a disclosure. See A4.575A.
How a disclosure is made
A person discloses an