CH63680 - Penalties for Failure to File on Time: Calculating the penalty: Calculation process: Unprompted disclosure calculation - example
Kelly filed her tax return 13 months after the filing date. Her failure was deliberate but not concealed. »Ê¹ÚÌåÓýapp disclosure was unprompted and does not involve an offshore matter. »Ê¹ÚÌåÓýapp tax liability (b) in her tax return is £12,000.
Step 1
»Ê¹ÚÌåÓýapp percentage for the quality of the disclosure (d) has been calculated as 80%.
Step 2
»Ê¹ÚÌåÓýapp maximum penalty (f) is 70% and the minimum penalty (g) is 20%.
So the maximum disclosure reduction (e) is
(f) - (g) = (e)
70% - 20% = 50%.
Step 3
»Ê¹ÚÌåÓýapp actual reduction percentage for disclosure (h) is
(e) x (d) = (h)
50% x 80% = 40%.
Step 4
Penalty percentage (c) is
(f) - (h) = (c)
70% - 40% = 30%.
Step 5
»Ê¹ÚÌåÓýapp penalty (a) is
(b) x (c) = (a)
£12,000 x 30% = £3,600.
Step 6
£3,600 is larger than the minimum penalty of £300 and so is the amount of penalty incurred.