ACCA Strategic Professional · Advanced Taxation (UK) · Value added tax
Hartley Ltd discovers it underpaid VAT on an earlier return because its bookkeeper was careless. Hartley Ltd tells HMRC of the error before HMRC has any suspicion of it, which is an unprompted disclosure. Using the standard penalties for errors in the ATX-UK tables, what range of penalty as a percentage of the extra tax is possible?
The possible penalty range is 0% to 30% of the extra tax. For careless errors the maximum is 30%, and with an unprompted disclosure the minimum falls to 0%. The 15% minimum applies only where the disclosure is prompted.
- A0% to 30%Correct
- B15% to 30%
- C20% to 70%
- D30% to 100%
Explanation
For careless behaviour the maximum penalty is 30%. The minimum is 0% for an unprompted disclosure and 15% for a prompted one. Because the disclosure was unprompted, the range is 0% to 30%. The 15% to 30% range would apply to a prompted disclosure.
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