HMRC internal manual

Compliance Handbook

Penalties for Inaccuracies: Calculating the penalty: Potential Lost Revenue: Calculating PLR for multiple inaccuracies

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

The potential lost revenue (PLR) is the additional tax from putting right the careless or deliberate inaccuracies taking into account any overstatements that reduce the tax effect of the inaccuracies.

The PLR must recognise any reduction of the tax effect of the understatements by overstatements of the same type of tax for the same tax period.

CH82271 gives further guidance on employer and/or contractor overstatements.

CH82250 explains the order in which the overstatements are set against the understatements in calculating the PLR.

The calculation of PLR for an inaccuracy in a document has the following steps.

Step 1

Calculate the tax effect of any overstatements of the same tax for the tax period, whether in the document or elsewhere, on the amount of the overall tax liability or repayment that resulted from the document.

Step 2

Calculate the additional amount due or payable as a result of putting right each inaccuracy in the document in the following order.

  • Inaccuracies where the person has taken reasonable care.
  • Careless inaccuracies.
  • Deliberate but not concealed inaccuracies.
  • Deliberate and concealed inaccuracies.

Step 3

Calculate the amount by which the additional tax for each inaccuracy should be reduced to take account of the effect of any overstatements in the same order as Step 2.

Where inaccuracies are due to behaviour of equal seriousness but cannot be grouped because they are subject to different reductions or suspension, see CH82210, you should correct those inaccuracies and set-off overstatements against them in the way that preserves the highest penalty liability.

For an example of allocating overstatements to PLR, see CH82272.

For an example of calculating the PLR for multiple inaccuracies where a delayed tax overstatement is involved, see CH82273.