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

Jonas, an ATX adviser, learns that his client Delta Ltd has filed a corporation tax return that careless staff prepared, understating tax by £20,000. Jonas tells the client and recommends correcting it before HMRC finds out. If Delta Ltd makes an unprompted disclosure of the careless error, what is the minimum penalty, and what is the most appropriate professional step if the client refuses to correct?

The minimum penalty is £0, because careless errors disclosed without prompting carry a 0% minimum. If the client refuses to correct the error, the adviser should cease to act and must not disclose to HMRC without the client's permission, unless the law requires disclosure.

1. AMinimum penalty £0; the adviser should cease to act and not disclose to HMRC without the client's permission, subject to any legal dutyCorrect
2. BMinimum penalty £3,000; the adviser should report the error to HMRC immediately without telling the client
3. CMinimum penalty £6,000; the adviser should continue to act and say nothing
4. DMinimum penalty £0; the adviser should amend the return himself without consent