Penalties

A new penalty regime is to be introduced next year which will affect March 2009 VAT returns either monthly or quarterly i.e. it some cases it will have an effective date of
1 January 2009.

In trying to simply and align penalties across the taxes which HMRC has responsibility for it has introduced new terminology, new penalties and new mitigation procedures as follows:

 

The table below shows the maximum penalty due for each type of inaccuracy.
Reason for penalty	Type of inaccuracy	Maximum penalty payable
Giving an inaccurate document	Careless	30% of PLR
Giving an inaccurate document	Deliberate not concealed	70% of PLR
Giving an inaccurate document	Deliberate and concealed	100% of PLR
Understated assessment not notified	Treated as careless	30% of PLR
Inaccuracy discovered later but no reasonable steps taken to tell us	Treated as careless	30% of PLR

PLR stands for Potential Lost Revenue

 

The table below shows the maximum and the minimum penalties for each type of inaccuracy.
Type of disclosure	Penalty	Careless	Deliberate	Deliberate and concealed
Unprompted	Maximum penalty	30%	70%	100%
	Minimum penalty	0%	20%	30%
Prompted	Maximum penalty	30%	70%	100%
	Minimum penalty	15%	35%	50%

HMRC has sought to reassure taxpayers that no penalty will be due if the inaccuracy was made despite the person taking reasonable care.

It is strongly recommended that our clients should put measures in place now to minimise errors as it may prove more difficult in the future to prove that reasonable care was exercised.

 

 

 

 

 

 

 

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