»Ê¹ÚÌåÓýapp

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In some cases, inaccurate information or documents will be given to HMRC in the course of a compliance check into a return or document where an inaccuracy penalty is chargeable under Schedule 24 FA07. In these cases, it may not be necessary to also charge a para 40A penalty for giving us inaccurate information in response to an information notice, even though the two inaccuracies are quite separate.

Giving HMRC inaccurate information during a compliance check will be taken into account in deciding the reduction for disclosure when calculating the Schedule 24 penalty.

Inaccuracy penalties under previous provisions are also applied in a similar way, with abatement or mitigation factors being affected by the giving of inaccurate information.

»Ê¹ÚÌåÓýapp penalty in para 40A should normally only be assessed where it is unlikely that the inaccurate information can be adequately penalised through a higher tax-geared penalty.

Example 1

You give a notice to a person asking for information about an avoidance scheme. »Ê¹ÚÌåÓýapp information is provided in order to comply with the notice. It later becomes clear that the person has deliberately given you inaccurate information to obstruct your check.

»Ê¹ÚÌåÓýapp avoidance is defeated and you are also able to show that the person has made a carelessly inaccurate return. »Ê¹ÚÌåÓýapp person has to pay a Schedule 24 penalty. »Ê¹ÚÌåÓýapp reduction for disclosure is much less because of the inaccurate information they provided while complying with your information notice.

In this case, a separate penalty under para 40A for the inaccurate response to the notice is unnecessary.

In exceptional circumstances you might need to penalise a person who is also facing an as yet un-quantified Schedule 24 penalty. For example, it might be clear that you need a lot more information and a para 40A penalty would help to secure better compliance for the rest of your check.

Example 2

»Ê¹ÚÌåÓýapp circumstances are as in Example 1 above except that you cannot show that the person has to pay a Schedule 24 penalty. »Ê¹ÚÌåÓýapp avoidance scheme was entered into on reasonable advice, but the person, fearing the avoidance might fail, decided to obstruct your compliance check by deliberately providing inaccurate information.

»Ê¹ÚÌåÓýapp only way to penalise the giving of inaccurate information in response to your notice is to assess a penalty under para 40A.

Example 3

You give a third party information notice to an avoidance promoter. »Ê¹ÚÌåÓýapp promoter attempts to obstruct your check by giving you inaccurate information. You cannot assess a Schedule 24 penalty on the promoter, whatever the outcome of your check, but you can assess a para 40A penalty on the promoter for carelessly or deliberately giving you inaccurate information.