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HMRC internal manual

Compliance Handbook

Charging penalties: introduction: offshore matters: failure to correct: calculating the penalty

To charge the penalty in NPPS see systems guidance COG90000. NPPS will calculate the penalty amount automatically based on the nature and quality of disclosure you input into the system.

If you are processing the penalty in NPPS follow guidance at

1. Working out the amount of the failure to correct penalty

The standard amount for the failure to correct penalty is 200% of the tax (amount A).

2. Working out the quality of disclosure reduction

To work out the quality of disclosure (amount B) you should consider the guidance at CH401293.

3. Voluntary or non-voluntary disclosure

Having established the behaviour and whether the disclosure was made voluntarily or not, from the table below find the

  • maximum penalty (amount C)
  • minimum penalty (amount D)
Disclosure Range minimum Range Maximum
Voluntary 100% of the tax liability 200% of the tax liability
Non-voluntary 150% of the tax liability 200% of the tax liability

Then calculate the maximum disclosure reduction (amount E)

(E) = (C) - (D).

4. Working out the reduction percentage for disclosure

Calculate the actual reduction percentage for disclosure (amount F) by multiplying the maximum disclosure reduction (E) by the percentage for the quality of the disclosure (B)

Actual reduction percentage for disclosure (F) = (E) x (B).

5. Working out penalty percentage

Calculate the penalty percentage to be charged (amount G) by deducting the actual reduction percentage for disclosure (F) from the penalty maximum (C)

Penalty chargeable (G) = (A) x (F).

Example - a non-voluntary disclosure

The penalty range for a non-voluntary disclosure is 200% (C) to 150% (D) and the offshore PLR is £100,000 (A).

The standard amount is 200% of the PLR £100,000 which is £200,000.

The reduction for quality of disclosure is 60% (B).

  1. The standard amount is £200,000 (A).

  2. The reduction percentage for the quality of the disclosure (B) has been calculated as 60%.

  3. The maximum penalty (C) is 200% and the minimum penalty (D) is 150%.

The maximum disclosure reduction (E) is 200 – 150 = 50%
  1. The actual reduction percentage for disclosure (F) is 50% x 60% = 30%.

  2. Penalty percentage to be charged (G) is 200% (C) – 30%(F) = 170%.

The penalty to be charged (amount H) is £100,000 (A) x 170% (G) = £170,000