CH81151 - Types of inaccuracy: Examples of deliberate but not concealed inaccuracy

This guidance applies to returns and documents with a filing date on or after 1 April 2009 where the return covers a tax period beginning on or after 1 April 2008 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.