ACCA Strategic Professional · Advanced Taxation (UK) · Ethical and professional issues arising from the giving of tax planning advice

A client has told you of a careless error in a prior return, and has now authorised you to disclose it. Which statement about the HMRC penalty position is correct?

Penalties for inaccuracies depend on the client's behaviour and on the quality and timing of disclosure. An unprompted disclosure of a careless error carries a lower minimum penalty than a prompted one, which is why advisers urge prompt correction.

1. AA prompted disclosure always carries the same penalty as an unprompted one
2. BNo penalty can apply to a careless error under any circumstances
3. CPenalties for careless errors are determined by the quality of disclosure, so an unprompted disclosure attracts a lower minimum penalty than a prompted oneCorrect
4. DPenalty is based solely on the tax year of the error and not on the client's behaviour