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HMRC internal manual

Compliance Handbook

HM Revenue & Customs
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Penalties for VAT and Excise Wrongdoing: Calculating the Penalty: Calculation process: Prompted disclosure calculation: Example

Garvin has made a prompted disclosure about misusing a product. The misuse was non-deliberate. The PLR is £12,000.

Step 1

The percentage for the quality of the disclosure (a) has been calculated at 60%.

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Step 2

The maximum penalty (b) is 30% and the minimum penalty (c) is 20%.

So the maximum disclosure reduction (d) is 30 - 20 = 10.

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Step 3

The actual reduction percentage for disclosure (e) is 10 x 60% = 6%.

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Step 4

Penalty percentage to be charged (f) is 30% - 6% = 24%.

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Step 5

The penalty to be charged (g) is £12,000 x 24% = £2, 880.