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ACCA Applied Skills · Taxation (UK) · The systems for self-assessment and the making of returns

Marcus carelessly understated his income tax liability by £10,000. After an HMRC enquiry he made a prompted disclosure. Based on the table of standard penalties for errors, what is the minimum penalty HMRC can charge?

The minimum penalty is £1,500. For careless errors where the disclosure is prompted, the minimum is 15% of the extra tax, and 15% of £10,000 is £1,500. The nil minimum applies only to unprompted disclosure.

  1. A£0
  2. B£1,500Correct
  3. C£3,000
  4. D£3,500

Explanation

For careless behaviour the minimum penalty with prompted disclosure is 15%. 15% × £10,000 = £1,500. £0 is the minimum only for unprompted disclosure, and £3,000 is the maximum (30%).

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