TC09555 - [2025] UKFTT 00748 (TC)

When issuing penalties the maximum and minimum rates are determined by reference to the nature of the behaviour giving rise to each individual inaccuracy assessed. In the present case the relevant inaccuracies were: (1) suppression of cash sales for VAT purposes at TSM, (2) failure to declare sales for VAT purposes at TSL, (3) over claimed input tax, and (4) insufficiency in corporation tax self-assessment arising from suppression of sales at TSM/non-declaration of trade at TSL and extraction by the participators. As we have found, each of the inaccuracies was deliberate, HMRC do not contend that the inaccuracies were concealed and the 3KH does not challenge that identification of the errors was prompted. As such and in accordance paragraph 10 Sch 24 FA07, the maximum penalty rate was 70% and the minimum is 35%. When determining where in the range between maximum and minimum penalty rates a particular penalty should be set HMRC take account of the assistance provided by the taxpayer under the headings Telling, Helping and Giving. Reductions to a maximum of 30%, 40% and 40% may be given under each heading.

In the present case, as regards each inaccuracy HMRC allowed 5% in respect of Telling and 10 % in respect of each of Helping and Giving (thereby reducing the penalty charged by 20% of the difference between the maximum and minimum penalties).