CH63700 - Penalties for Failure to File on Time: Calculating the penalty: Calculation process: Prompted disclosure calculation - example
Terry has filed his return 15 months after the filing date, after being prompted. His failure was deliberate and concealed. »Ê¹ÚÌåÓýapp information withheld did not involve an offshore matter. »Ê¹ÚÌåÓýapp tax liability (b) resulting from the return is £20,000.
Step 1
»Ê¹ÚÌåÓýapp percentage for the quality of the disclosure (d) has been calculated as 70%.
Step 2
»Ê¹ÚÌåÓýapp maximum penalty (f) is 100% and the minimum penalty (g) is 50%.
So the maximum disclosure reduction (e) is
(f) - (g) = (e)
100% - 50% = 50%.
Step 3
»Ê¹ÚÌåÓýapp actual reduction percentage for disclosure (h) is
(e) x (d) = (h)
50% x 70% = 35%.
Step 4
Penalty percentage (c) is
(f) - (h) = (c)
100% - 35% = 65%.
Step 5
»Ê¹ÚÌåÓýapp penalty (a) is
(b) x (c) = (a)
£20,000 x 65% = £13,000.
Step 6
£13,000 is larger than the minimum penalty of £300 and so is the amount of penalty incurred.