RSTP3011 - Penalty for inaccuracy in taxpayer document

RSTPA guidance on the penalty a person may be liable to for giving Revenue Scotland a document containing a careless or deliberate inaccuracy.

If:

  • you give us a document of a kind contained in the table below;
  • that document contains an inaccuracy which amounts to, or leads to:
    • an understatement of a tax liability;
    • a false or inflated statement of a loss, exemption or relief; or
    • a false or inflated claim for relief or to repayment to tax;
  • and the inaccuracy was deliberate or careless on your part,

then you are liable to:

  • a penalty of 100% of the potential lost revenue for each deliberate inaccuracy; and
  • a penalty of 30% of the potential lost revenue for each careless inaccuracy contained in the document.

Potential lost revenue is defined under sections 187 to 190 of the RSTPA 2014 (see RSTP3014).

An inaccuracy is careless if it is due to you failing to take reasonable care (see RSTP3025). In other words, if you took reasonable care the inaccuracy is neither deliberate nor careless.

An inaccuracy which was neither deliberate nor careless on your part when the document containing the inaccuracy was given to us is to be treated as being careless if you discovered the inaccuracy at a later time and did not take reasonable steps to inform us as soon as was practicable after the inaccuracy was discovered.

RSTPA 2014 sections 182-183

We may reduce the amount of this penalty 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).

We may also suspend the penalty in certain circumstances (see further below).

RSTPA 2014 sections 191-192

Documents to which this penalty relates

  Tax Document
1 Land and Buildings Transaction Tax

(a) Return under section 29, 31, 33 or 34 of the LBTT(S)A 2013.

(b) Return under paragraph 10, 11, 20, 22 or 30 of Schedule 19 to the LBTT(S)A 2013.

(c) Application under section 41 of the LBTT(S)A 2013.

(d) Amended return under section 83 of the RSTPA 2014.

(e) Claim under section 106, 107 or 108 of the RSTPA 2014.

2 Scottish Landfill Tax

(a) Return under regulations made under section 25 of the LT(S) Act 2014.

(b) Amended return under section 83 of the RSTPA 2014.

(c) Claim under section 106, 107 or 108 of the RSTPA 2014.

Suspending the penalty

We may suspend all or part of the penalty for a careless (not deliberate) inaccuracy but only if your compliance with a condition of the suspension would help you to avoid becoming liable to further similar types of penalties for careless inaccuracies. 

If we decide that a suspension is justifiable, we must notify you specifying:

  • what part of the penalty is to be suspended;
  • the period of suspension (which cannot exceed two years); and
  • the conditions of suspension which you must comply with.

A condition of suspension may specify an action to be taken, and the period within which that action may be taken.

On the expiry of the period of suspension:

  • if you satisfy us that you have complied with the conditions of suspension then the suspended penalty (or the part of the penalty that was suspended) is cancelled; but
  • if we are not satisfied that you have complied with the conditions of suspension, the suspended penalty (or the part of the penalty that was suspended) becomes payable, including any interest on the penalty that would have otherwise been chargeable but for the deferral.

If, during the period of suspension, you become liable to another penalty for providing a document to us containing a careless or a deliberate inaccuracy, the suspended penalty (or the part of the penalty that was suspended) becomes payable, together with any interest on the penalty that would have otherwise been chargeable but for the deferral.

RSTPA 2014 section 184

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 our decision which corrects the inaccuracy (such as a decision to make a Revenue Scotland assessment); or
  • if there is no such assessment by us to the tax concerned above, the date on which the inaccuracy 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 you give us a document containing a careless inaccuracy and 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 (such as a Revenue Scotland assessment - see RSTP1008).

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 giving us a document containing a deliberate or careless inaccuracy 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.

RSTPA 2014 section 193

Ref ID: 
RSTP3011
Archive Date: 
15 March 2015
Last updated: 
15 March 2015
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