- you receive a Revenue Scotland determination (see RSTP1007) or assessment (see RSTP1008) from us;
- the determination or assessment understates your tax liability; and
- within 30 days of the date we issue the determination or assessment you fail to take reasonable steps to notify us that it is an under-determination or under-assessment,
then you are liable to a penalty of 30% of the potential lost revenue (see RSTP3014 for a definition of potential lost revenue).
In deciding what steps (if any) were reasonable, we must consider:
- whether you knew, or should have known, about the under-determination or under-assessment; and
- what steps it would have been reasonable to take to notify us about the under-determination or under-assessment.
We may reduce the amount of a penalty for failing to notify us about an under-determination or under-assessment of tax if:
- we think it is right to do so because of special circumstances (see RSTP3023); or
- you make a qualifying disclosure to us (see RSTP3024).
Assessing and paying the penalty
We must make an assessment and notify you of your liability to this penalty (stating the period against which the penalty has been assessed) within the period of 12 months beginning with:
- the end of the ‘appeal period’ (see below) for the assessment of tax which corrected the under-determination or under-assessment; or
- if there is no such assessment, the date on which the under-determination or under-assessment is corrected.
The ‘appeal period’ is the period during which an appeal could be brought (see RSTP6008), or the period during which an appeal that has been brought has not been determined or withdrawn.
Subject to the above time limit, we can make a supplementary assessment of your liability to this penalty if an earlier assessment we made was calculated using an underestimate of the potential lost revenue.
For example, if we initially assess you as being liable to a penalty for £300 (in relation to a potential lost revenue of £1,000), and we later discover that the actual potential lost revenue was £1,500, we can make a supplementary assessment the effect of which is that you are liable to a further penalty of £150 (so that the initial and later penalties total 30% of the actual potential lost revenue, which amounts to £450 in this example).
We can combine an assessment (or supplementary assessment) of this penalty with any assessment we make in relation to your tax liability.
You must pay the penalty no later than 30 days from the date on which we issued the notice of the penalty to you.
We will charge interest on the amount of any unpaid penalty from the date on which the penalty is due to be paid until you pay it (see RSTP4003).
A penalty for failing to notify us about an under-determination or under-assessment of tax is treated for enforcement purposes (see RSTP5001) as an assessment to tax. This means that we have the same debt enforcement and recovery powers in relation to this penalty (and other penalties) as we have in relation to tax.