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HMRC internal manual

Compliance Handbook

Penalties for VAT and Excise Wrongdoing: Calculating the Penalty: Calculation process: Unprompted disclosure calculation: Example

Tedros has made an unprompted disclosure involving the deliberate (without concealment) unauthorised issue of an invoice showing VAT. The PLR is £145,000.

Step 1

The percentage for the quality of the disclosure (a) has been calculated at 65%.

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Step 2

The maximum penalty (b) is 70 % and the minimum penalty (c) is 20%.

So the maximum disclosure reduction (d) is 70 - 20 = 50%.

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Step 3

The actual reduction percentage for disclosure (e) is 50 x 65% = 32.5%.

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Step 4

Penalty percentage to be charged (f) is 70% - 32.5% = 37.5%.

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Step 5

The penalty to be charged (g) is £145,000 x 37.5% = £54,375.