Skip to content

ACCA Strategic Professional · Advanced Taxation (UK) · Appropriateness of planning measures to a taxpayer's circumstances and objectives

Hana's company understated its corporation tax by £80,000 through a deliberate error that it also concealed by creating false invoices. The company made an unprompted disclosure to HMRC before any enquiry. Using the standard penalty table in the ATX-UK tax tables, what is the minimum penalty that can be charged, assuming the potential lost revenue is £80,000?

The minimum penalty is £24,000. Deliberate and concealed behaviour carries a minimum of 30% where disclosure is unprompted. Applying 30% to the £80,000 of potential lost revenue gives £24,000. The higher 50% minimum would apply only if disclosure had been prompted.

  1. A£16,000
  2. B£24,000Correct
  3. C£28,000
  4. D£40,000

Explanation

The behaviour is deliberate and concealed. For unprompted disclosure the minimum is 30%. 30% x £80,000 = £24,000. The 50% minimum (£40,000) would apply only for prompted disclosure, and 20% (£16,000) applies to non-concealed behaviour.

Did you get it right without looking?

One question tells you little. A timed set on Appropriateness of planning measures to a taxpayer's circumstances and objectives shows your real accuracy, how long you take and where you lose marks.

Practise Appropriateness of planning measures to a taxpayer's circumstances and objectivesFree diagnostic mock

More Appropriateness of planning measures to a taxpayer's circumstances and objectives questions