ACCA Applied Skills · Taxation (UK) · Payment of inheritance tax
Dev's executors submitted an IHT account that understated the tax due. HMRC found the error to be careless, and the executors made a prompted disclosure. Using the Finance Act 2025 standard penalties for errors, what is the minimum penalty as a percentage of the extra tax due?
The minimum penalty is 15% of the extra tax. Careless errors carry a maximum of 30%, with a minimum of 0% if the disclosure is unprompted but 15% where it is prompted by HMRC, as here.
- A15%Correct
- B0%
- C30%
- D35%
Explanation
For careless behaviour, the minimum penalty is 0% for unprompted disclosure and 15% for prompted disclosure. 0% is the unprompted minimum. 30% is the maximum for careless behaviour. 35% is the minimum for deliberate but not concealed behaviour with prompted disclosure.
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