CH81151 - Penalties for Inaccuracies: Types of inaccuracy: Examples of deliberate but not concealed inaccuracy
You must check the date from which these rules apply for the tax or duty you aredealing with. SeeCH81011for full details.
Example 1
Sarah takes £50 per week from her takings as ‘pocket
money’. This money goes unrecorded when she adds up her
weekly takings and enters the total into her records. Those records
form the basis of Sarah’s turnover figure on her tax return,
which she knows to be incorrect.
Sarah has deliberately recorded the wrong figure of sales in
the business records. However there is no evidence of additional
artificial or false records being produced to conceal this
deliberate inaccuracy.
Example 2
Dave counts his stock at the year end and believes that it is
worth £100,000. Aware that by reducing this value he can
reduce his profits, Dave makes a totally unjustified provision
against this of £50,000.
He supplies accounts and a balance sheet with his return and
on the balance sheet shows the stock as being £100,000 less a
provision of £50,000. There are no additional steps to conceal
the understatement though it has been done deliberately.
Example 3
Imran keeps accurate business records. When completing one of
his VAT returns he decides to enter an inflated input tax figure in
the return to reduce his declared net liability. He hopes that the
false return will not be selected for checking.
Imran is liable to a penalty for a deliberate inaccuracy.
However, he has not taken additional steps to conceal it.
Example 4
Hugh is approved under the Registered Excise Dealer and Shipper
(REDS) scheme, and acts as an Agent on behalf of several importers
of excise goods. Hugh receives notification from one of his clients
that four crates of beer have been received at his business
premises. Hugh discharges the movement on the AAD (Administrative
Accompanying Document).
However, on the next REDS return, Hugh decides only to
declare the excise duty on the receipt of three crates, hoping that
the return will not be checked on the next audit. Although Hugh is
liable to a penalty for a deliberate inaccuracy, Hugh has not taken
additional steps to conceal it.
Example 5
Fiona is the personal representative of her late father’s estate. Her father owned a house but Fiona makes no attempt to establish its market value. She includes an estimated value in the IHT account based on what her father paid for the house many years before, when she knows it is clearly worth much more. Fiona has deliberately included a value that she knows to be incorrect in the IHT account. However, she has not taken other steps to conceal the under- valuation.
