ACCA Strategic Professional · Advanced Taxation (UK) · Mitigation of tax by numerical analysis and reasoned argument
Dev submitted a tax return that understated tax by £30,000 because of carelessness. HMRC found the error after an enquiry, so disclosure was prompted, and Dev fully cooperated. Using the standard penalty table in the ATX-UK tax tables, what is the lowest penalty HMRC can charge?
The minimum penalty is £4,500. For careless errors the minimum with prompted disclosure is 15% of the extra tax, and 15% of £30,000 is £4,500. The 0% minimum applies only if disclosure is unprompted, and 30% is the maximum.
- A£0
- B£4,500Correct
- C£9,000
- D£10,500
Explanation
For careless behaviour the minimum penalty with prompted disclosure is 15%. 15% x £30,000 = £4,500. £0 applies only to unprompted disclosure, and £9,000 is the 30% maximum.
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