ACCA Applied Skills · Taxation (UK) · Penalties for non-compliance
Delta Ltd understated its corporation tax by £20,000 through a deliberate error, which it did not conceal. HMRC found the error through a compliance check, so the disclosure was prompted. What is the minimum penalty under the standard penalty table?
The minimum penalty is £7,000. A deliberate but not concealed error has a prompted minimum of 35%, and 35% of £20,000 is £7,000. The 20% unprompted minimum (£4,000) and 70% maximum (£14,000) are wrong for a prompted disclosure.
- A£4,000
- B£7,000Correct
- C£10,000
- D£14,000
Explanation
For a deliberate but not concealed error, the prompted minimum penalty is 35%. 35% × £20,000 = £7,000. £4,000 is the unprompted minimum (20%), and £14,000 is the maximum (70%).
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