Finance Act 1993

Misdeclaration penalty under section 14A of the 1985 Act U.K.

2 (1) In subsection (1)(b) of section 14A of the 1985 Act (misdeclaration resulting in understatements or overclaims), for the words from “whichever” to “period” there shall be substituted “ whichever is the lesser of £500,000 and 10 per cent. of the gross amount of tax for that period ”.

(2) For subsections (2) and (3) of that section (liability for penalty where there are misdeclarations on three or more occasions) there shall be substituted the following subsections—

“(2) Subsection (3) below applies in any case where—

(a) there is a material inaccuracy in respect of any prescribed accounting period;

(b) the Commissioners serve notice on the person concerned (in this section referred to as a “penalty liability notice”) specifying a penalty period for the purposes of this section;

(c) that notice is served before the end of five consecutive prescribed accounting periods beginning with the period in respect of which there was the material inaccuracy; and

(d) the period specified in the penalty liability notice as the penalty period is the period of eight consecutive prescribed accounting periods beginning with that in which the date of the notice falls.

(3) If, where a penalty liability notice has been served on any person, there is a material inaccuracy in respect of any of the prescribed accounting periods falling within the penalty period specified in the notice, that person shall be liable, except in relation to the first of those periods in respect of which there is a material inaccuracy, to a penalty equal to 15 per cent. of the tax for the prescribed accounting period in question which would have been lost if the inaccuracy had not been discovered.”

(3) In subsection (4) of that section, for “subsections (4) to (5B)” there shall be substituted “ subsections (4), (4B), (5A) and (5B) ”.

(4) In subsection (6) of that section (material inaccuracies not to be material in cases to which other sections apply), at the end there shall be inserted “ except, in the case of an inaccuracy by reason of which a person is assessed to a penalty under section 14 above, for the purposes of subsection (2)(a) above. ”

(5) Subject to sub-paragraph (6) below, this paragraph shall have effect in relation to any prescribed accounting period beginning on or after such day as the Treasury may by order made by statutory instrument appoint.

(6) No penalty liability notice shall be served on or after the day appointed under sub-paragraph (5) above by reference to any material inaccuracy in respect of a prescribed accounting period beginning before that day, and the penalty period specified in any penalty liability notice served before that day shall be deemed to end with the day before that day.

Subordinate Legislation Made

P1 Sch. 2 para. 2(5) power fully exercised (10.11.1993): 1.12.1993 appointed day by S.I. 1993/2782, art. 2.