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HMRC internal manual

International Manual

Double Taxation Relief: Anti avoidance legislation Penalties

If no notice was issued before a return is made, the return cannot be considered to be incorrect because it fails to take into account the legislation, and so there can be no penalty for an incorrect return. If a notice is subsequently issued, the taxpayer is allowed 90 days to amend their tax return if necessary, in order to give effect to the legislation.

After a notice has been given, a return or an amended return is incorrect if it fails properly to take account of the legislation. As usual, penalties in respect of an incorrect return arise only if the return was incorrect as a result of the deliberate conduct of the taxpayer. If a taxpayer believed that the legislation did not apply, or that its effect differed from that finally determined, and this view resulted from a reasonable and tenable view of the law, then there would be no possibility of a penalty.

In the case of a notice issued after a return, no penalty can arise as a result of an uncorrected return until the expiry of the 90 day period in which the return may be amended.