RSTP3024 - Reduction of a penalty for disclosure

RSTP3024 - Reduction of a penalty for disclosure

We may reduce the amount of any of the following penalties if:

• in relation to any penalty for failing to make a tax return (see RSTP3005), you disclose relevant information to us;
• in relation to a penalty for an inaccuracy in a taxpayer document given to us (see RSTP3011), you make a qualifying disclosure to us;
• in relation to a penalty for an inaccuracy in a taxpayer document given to us and which is attributable to a person other than the taxpayer (see RSTP3012), you make a qualifying disclosure to us;
• in relation to a penalty for failing to notify us about an under-determination or under-assessment of tax (see RSTP3013), you make a qualifying disclosure to us; or
• (for SLfT only) in relation to a penalty for failing to comply with a relevant requirement imposed by or under section 22 or 23 of the LT(S)A 2014 (see RSTP3019), you disclose the relevant failure to us.

Disclosure of ‘relevant information’

‘Relevant information’ is information which has been withheld by failure to make a return to us.

You disclose relevant information to us by:

• telling us about it;
• giving us reasonable help in quantifying any tax which is unpaid by reason of the relevant information having been withheld; and
• allowing us to access your records so we can check how much tax is unpaid.

Any reductions for disclosure that we make to a penalty for failing to make a return to us may reflect:

• whether the disclosure of the relevant information was prompted or unprompted; and
• the quality of the disclosure.

Disclosure of relevant information is ‘unprompted’ if you made it at a time when you had no reason to believe that we had discovered, or were about to discover, the relevant information.  Disclosure of relevant information which is not unprompted is otherwise ‘prompted’.

In relation to disclosure, ‘quality’ includes the timing, nature and extent of the disclosure.

The ‘Reductions’ heading further below sets out the different levels of reduction we may make to a penalty amount, depending on the quality of the disclosure and whether it was prompted or unprompted.

RSTPA 2014 section 175

Qualifying disclosures

A ‘qualifying disclosure’ means disclosure of:

• an inaccuracy;
• a supply of false information or withholding of information; or
• a failure to disclose an under-determination or under-assessment.

You make a qualifying disclosure to us by:

• telling us about it;
• giving us reasonable help in quantifying the inaccuracy, the inaccuracy attributable to the supply of false information or withholding of information, or the under-determination or under-assessment; and
• allowing us to access your records so we can ensure that the inaccuracy, the inaccuracy attributable to the supply of false information or withholding of information, or the under-determination or under-assessment is fully corrected.

Any reductions for a qualifying disclosure that we may make to a relevant penalty may reflect:

• whether the disclosure of the relevant information was prompted or unprompted; and
• the quality of the disclosure.

Disclosure of relevant information is ‘unprompted’ if you made it at a time when you had no reason to believe that we had discovered, or were about to discover, the inaccuracy, the supply of false information or withholding of information, or the under-determination or under-assessment.  Disclosure of relevant information which is not unprompted is otherwise ‘prompted’.

In relation to disclosure, ‘quality’ includes the timing, nature and extent of the disclosure.

The ‘Reductions’ heading further below sets out the different levels of reduction we may make to a penalty amount, depending on the quality of the disclosure and whether it was prompted or unprompted.

RSTPA 2014 section 192

Disclosure of a ‘relevant failure’ – Applies to SLfT only

A ‘relevant failure’ is a failure by you to comply with a relevant requirement imposed by or under section 22 or 23 of the LT(S)A 2014.

You disclose a relevant failure to us by:

• telling us about it;
• giving us reasonable help in quantifying any tax which is unpaid by reason of the relevant failure; and
• allowing us to access your records so we can check how much tax is unpaid.

Any reductions for disclosure that we make to a penalty for failing to comply with a relevant requirement may reflect:

• whether the disclosure of the relevant failure was prompted or unprompted; and
• the quality of the disclosure.

Disclosure of a relevant failure is ‘unprompted’ if you made it at a time when you had no reason to believe that we had discovered, or were about to discover, the relevant failure.  Disclosure of a relevant failure which is not unprompted is otherwise ‘prompted’.

In relation to disclosure, ‘quality’ includes the timing, nature and extent of the disclosure.

The ‘Reductions’ heading below sets out the different levels of reduction we may make to a penalty amount, depending on the quality of the disclosure and whether it was prompted or unprompted.

RSTPA 2014 section 212

Reductions

As mentioned above, we may at our discretion reduce the amount of a penalty depending on the quality (timing, nature and extent) of your disclosure and whether it was prompted or unprompted.   The amount by which we may reduce the penalty will vary on a case by case basis, and we will apply the following maximum reductions in relation to the disclosure:

• ‘timing’ – up to 30% of the full penalty amount.  ‘Timing’ refers to how promptly you made the disclosure to us (and for the purposes of reducing the penalty amount this also includes whether your disclosure was prompted or unprompted).  There should be no avoidable delays on your behalf – indeed where possible you should be actively approaching us and providing information as early as possible;
• ‘nature’ – up to 40% of the full penalty amount.  ‘Nature’ refers to the type of evidence and the degree of access you give us to test the disclosure.  It covers the extent to which any assistance you provide to us is helpful and saves us time and effort in quantifying the consequences of the respective failure or inaccuracy.  It also includes any help you provide to us in bringing the compliance check to a speedy and accurate conclusion.

If you appear to be helpful but do not actually produce anything of use to us, in most cases you will not receive the maximum 40% reduction possible in relation to the ‘nature’ of the disclosure; and    

• ‘extent’ – up to 30% of the full penalty amount.  ‘Extent’ refers to how complete your disclosure is.  It covers the whole period and all aspects of our compliance check.  If you only provide help to us for part of the time or only in certain aspects then in most cases you will not receive the maximum 30% reduction possible in relation to the ‘extent’ of the disclosure.

There may be overlaps between the above categories.  Where this is the case a single course of action may qualify for a reduction under more than one category.