You must check the date from which these rules apply for
the tax or duty you aredealing with. SeeCH81011for full details.
Alec didn’t send his completed VAT return for the
quarter ended 30 September 2011. We issued a central assessment for
£20,000. Alec eventually submitted the VAT return which showed
a liability of £27,000. He did not contact us at any time to
tell us that the assessment was too low.
Scenario 1 (Return accepted)
Alec’s late return is accepted without challenge. The
potential lost revenue (PLR) is £7,000 (£27,000 -
£20,000).
Scenario 2 (Inaccuracy despite taking reasonable
care)
An assurance visit establishes that Alec’s VAT return
is inaccurate and that the correct figure of tax due is
£30,000. The officer accepts that Alec had taken reasonable
care in completing his return so there is no penalty for the
inaccuracy. The PLR for the under-assessment is £10,000
(£30,000 – £20,000), that is, the difference
between the amount assessed and the final liability.
Scenario 3 (Careless inaccuracy)
The facts are the same as for scenario 2 except that the
inaccuracy in Alec’s VAT return is due to his failure to take
reasonable care.
The PLR for the under-assessment is £10,000
(£30,000 – £20,000).
However, as Alec failed to take reasonable care he is also
liable to a penalty for inaccuracy. The PLR for that is £3,000
(£30,000 - £27,000), that is, the difference between the
amount returned and the final liability.
See
CH84970 for the rules to be applied where
more than one penalty is chargeable in respect of the same tax
liability.
