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HMRC internal manual

Compliance Handbook

Penalties for inaccuracies: in what circumstances is a penalty payable: inaccuracies - general

You must check the date from which these rules apply for the tax or duty you are dealing with. See CH81011 for full details.

Schedule 24 FA 2007 contains three penalties.

1. Giving HMRC an inaccurate document (FA07/SCH24/PARA1)

A penalty is chargeable where a person gives HMRC an inaccurate return or other document, see CH81060, which satisfies the two conditions in CH81070. These are

  • the inaccurate document either amounts to or leads to

    • an understatement of a person’s liability to tax, or
    • a false or inflated statement of a loss, or
    • a false or inflated claim to repayment of tax, and
  • the inaccuracy was careless, see CH81120, or deliberate, see CH81150 and CH81160.

2. Inaccuracy in document is due to another person (FA07/SCH 24/PARA1A)

A penalty is chargeable on another person (T) where T deliberately

  • supplies false information (directly or indirectly) to a person (P), or
  • withholds information from P

with the intention of making P’s document inaccurate, see CH81165.

T can be charged this penalty whether or not P is also charged a penalty because of the same inaccuracy.

3. Under-assessment by HMRC (FA07/SCH24/PARA2)

A penalty is chargeable where a person fails to notify us that we have under-assessed their tax liability within 30 days of the date of the assessment, see CH81090. This penalty will only apply to Inheritance Tax in exceptional circumstances, see CH81170.

The penalties within Schedule 24 FA 2007 are civil monetary penalties. We also have a criminal investigation policy (HMRC website) and will refer the most serious cases for consideration of criminal proceedings where appropriate.

Where a penalty for an inaccuracy is payable the Human Rights Act (HRA) must be considered. You must apply this guidance in conjunction with the HRA procedures at CH300000+.