TC09641 - [2025] UKFTT 01115 (TC)

FA 2007, Sch 24 provides for penalties to be payable where a person submits certain categories of document, including a VAT return, to HMRC, and that document contains an inaccuracy that fulfils certain criteria. The amount of the penalty is a percentage of the “potential lost revenue” (broadly, the additional tax due as a result of correcting the inaccuracy). The percentage depends on a number of factors including whether the inaccuracy was careless or deliberate, and if deliberate, whether it was also concealed. Penalty reductions apply for quality of disclosure (or “telling, helping and giving”), meaning broadly how much assistance the taxpayer gave to HMRC in relation to the matter giving rise to the penalty. HMRC also have the power to reduce a penalty if they think it is right to do so because of special circumstances.

The provision giving HMRC the power to issue PLNs in relation to inaccuracy penalties is at FA 2007, Sch 24, para 19. This provides so far as relevant:

“19 (1) Where a penalty under paragraph 1 is payable by a company for a deliberate inaccuracy which was attributable to an officer of the company, the officer is liable to pay such portion of the penalty (which may be 100%) as HMRC may specify by written notice to the officer.

(2)

Sub-paragraph (1) does not allow HMRC to recover more than 100% of a penalty.

(3)

In the application of sub-paragraph (1) to a body corporate other than a limited liability partnership “officer” means—

(a)

a director (including a shadow director within the meaning of section 251 of the Companies Act 2006 (c 46)),

(aa) a manager, and

(b)

a secretary.”

Where a person is required to pay an amount under a PLN, FA 2007, Sch 24, para 19(5)(e) has the effect that the rules about appealing against a penalty apply as if that person had been required to pay a penalty of that amount.