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Introduction

The rate of the penalty chargeable on the taxpayer under the harmonised penalty regime is based on the behaviour of the taxpayer and whether the error came to light from an unprompted or prompted disclosure. Once these factors have been decided, a penalty is calculated based on the potential lost revenue (PLR). The PLR is the extra tax due as a result of correcting the inaccuracy or under-assessment. See the Calculating the penalty for inaccuracies ― potential lost revenue guidance note.

The behaviours are:

1. •

   reasonable care ― where a taxpayer has taken reasonable care but despite this has made a mistake then no penalty will be due

2. •

   careless ― means a failure to take reasonable care

3. •

   deliberate ― a deliberate inaccuracy occurs where a person knowingly and intentionally gives HMRC an inaccurate document

4. •

   deliberate and concealed ― a document containing a deliberate inaccuracy is given to HMRC and active steps are taken to cover up the inaccuracy before or after the document has