Mitigation of penalties from compliance checks

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Owner-Managed Businesses

Guidance

Mitigating the additional tax that may be due as a result of an inaccuracy, in addition to mitigating the penalties that may be charged on conclusion of a compliance check, should be considered by the adviser throughout the course of the check.

Mitigating the additional tax liability

If an inaccuracy is found in a return during a compliance check, an adviser should give thought to whether there are any actions or claims that could be made to mitigate the additional tax liability.

For example, if additional items are found to be capital that have been charged as revenue expenses, the adviser should ensure that capital allowance claims are made for the items if they qualify. The adviser should also review the return for any expenses that may have been missed (eg use of home as office, use of private car for business purposes, loan interest).

Mitigating interest

If interest is charged on additional tax due, it is generally difficult to mitigate this unless HMRC has caused undue delay in

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