The following Employment Tax guidance note Produced by Tolley in association with Philip Rutherford provides comprehensive and up to date tax information covering:
The current penalty regime for errors in returns and documents has been in place since 1 April 2009, although it was extended with effect from 1 April 2010. The main legislation is FA 2007, s 97, Sch 24 and FA 2008, s 122, Sch 40. This legislation was brought in to harmonise the penalty regime across all of the major taxes.
The main aim of the legislation is:
to provide an aligned penalty regime across direct and indirect taxes
to provide a deterrent to non-compliance by penalising those who fail to comply
to encourage the non-compliant to return voluntarily to compliance
HMRC made it clear in the consultation leading to the introduction of these provisions that it felt higher penalties were appropriate for those who did not disclose errors unless prompted and / or did not cooperate in a check of the returns. The tiered penalty regime is therefore intended to give fairer and more proportionate results for offences of differing levels of behaviour.
The basis of calculation of penalties is a two stage process:
calculate a percentage, based on the taxpayer’s behaviour (see the Calculating the penalty for inaccuracies in returns - behaviour of the taxpayer guidance note)
calculate the potential lost revenue (PLR). This is the extra tax due as a
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