CH84972 - Penalties for Inaccuracies: Other penalty issues: Interaction with other penalties and surcharges: Examples of a penalty and late payment surcharge on the same tax
You must check the date from which these rules apply for the tax or duty you are dealing with. See CH81011 for full details.
Helen sends her SA return to us on time and it shows a liability of £50,000 which she pays on time. An enquiry concludes that the liability is understated by £25,000. The caseworker believes that and inaccuracy penalty is due. However, the caseworker is also aware that the additional tax, if paid late, will attract a surcharge under TMA70/S59C
Scenario 1 (Inaccuracy penalty higher than late payment surcharge)
| Inaccuracy penalty | = 25% |
| Surcharge | = 10% |
| Inaccuracy penalty 15% (25% - 10%) x £25,000 | £ 3,750 |
| Surcharge 10% x £25,000 | £2,500 |
| Total Late Payment Surcharge & Penalty | £6,250 |
Scenario 2 (Inaccuracy penalty the same as late payment surcharge)
| Inaccuracy penalty | = 10% |
| Surcharge | = 10% |
| Inaccuracy penalty 0% (10% - 10%) | £ 0 |
| Surcharge 10% x £25,000 | £2,500 |
| Total Late Payment Surcharge & Penalty | £2,500 |
Note: Refer to CH400000 for operational guidance.
