Calculating the penalty for inaccuracies ― potential lost revenue

Produced by Tolley in association with

Owner-Managed Businesses

Guidance

The rate of the penalty chargeable on the taxpayer under the harmonised penalty regime is based on the behaviour of the taxpayer 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 defined as the additional tax arising as a result of correcting the inaccuracy or assessment as determined by FA 2007, Sch 24, para 5. For the purposes of calculating the PLR, tax includes national insurance contributions. For HMRC guidance on PLR, see CH82150–CH82273.

For details of the behaviours, see the Calculating the penalty for inaccuracies in returns ― behaviour of the taxpayer guidance note.

For more on whether the disclosure is prompted or unprompted, see the Penalty reductions for inaccuracies guidance note.

Over-statements, which can include previously unmade claims to reliefs or deductions available, are only set against understatements in calculating the PLR where they relate to the same type of liability and the same

Continue reading

To read the full Guidance note, register for a free trial of Tolley+™

TAKE A FREE TRIAL

Philip Rutherford

Senior Tax Director at Molson Coors Brewing Company

Phil is the Senior Tax Director for Molson Coors' European operations. He has responsibility for both direct and indirect taxes across both EU and non-EU states. Prior to this, Phil was responsible for Molson Coors UK tax affairs covering all major taxes and duties. Phil trained at KPMG LLP, where he worked for 8 years, specialising in tax investigations across both direct and indirect tax.

Popular Articles

Personal Tax

Income tax losses ― overview

Income tax losses ― overviewIncome tax losses can arise due to a number of reasons, but not all losses can be relieved against total income and some losses can only be set against certain types of component income. The table below is a summary of the main reliefs for income tax losses.Summary of

04 Mar 2021 12:19 | Produced by Tolley Read more

Trusts and Inheritance Tax

Spouse exemption from inheritance tax

Spouse exemption from inheritance taxArguably, the most important inheritance tax exemption is the spouse exemption from inheritance tax.There is no IHT to pay on gifts from husband to wife and vice versa, or from one civil partner to the other (referred to collectively in this note as ‘spouses’).

14 Jul 2020 13:56 | Produced by Tolley in association with Emma Haley at Boodle Hatfield LLP Read more

Personal Tax

Interest and penalties on late paid tax under self assessment

Interest and penalties on late paid tax under self assessmentInterestIf the capital gains tax, the balancing payment or payments on account of tax and / or Class 4 national insurance contributions (NIC) are paid late, HMRC will charge interest on the amount overdue from the original due date. The

14 Jul 2020 12:00 | Produced by Tolley Read more

��Ƶ