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HMRC internal manual

Compliance Handbook

Penalties for Inaccuracies: Calculating the Penalty: Penalty reductions for quality of disclosure: Calculating the reduction for disclosure - examples

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

Example 1

Peter made an unprompted disclosure of an inaccuracy that was deliberate but not concealed. It did not involve an offshore matter.

The maximum penalty is 70% and the minimum penalty is 20%, see CH82470.

The quality of the disclosure was decided as

Telling 20% (of the full 30% see CH82440)
Helping 25% (of the full 40% see CH82450)
Giving access 20% (of the full 30% see CH82460)
Total 65% (of the full 100%)

So the quality of disclosure is 65%.

The maximum and minimum percentages could be higher if Peter’s inaccuracy involved an offshore matter and the tax at stake was income tax or capital gains tax, see CH82480+.

Example 2 

In this case, the inaccuracy Peter was disclosing related to an investment in an offshore territory in category 1. He had chosen not to correct the inaccuracy earlier, but due to the introduction of much greater automatic exchange of information decided to make a full unprompted disclosure of the deliberate inaccuracy.

For a deliberate inaccuracy in a category 1 jurisdiction the maximum penalty is 70% and the minimum penalty is 20%. However in this case as Peter had waited a significant period to tell HMRC about the inaccuracy and would have had access to targeted offshore disclosure facilities, HMRC would not expect to reduce the penalty any lower than 30% even with full cooperation. If Peter did not cooperate fully after the disclosure was submitted even higher penalties may be due.