HMRC has updated the guidance on how penalties will be considered following HMRC audits and voluntary disclosure of failures in the reporting of chargeable events by insurers and friendly societies
The guidance applies to incorrect and late issued certificates identified during routine HMRC audits of chargeable event processes and the voluntary disclosure of failures to HMRC by companies following internal checks.
The update incorporates HMRC’s revised approach to the charging of penalties in the case of voluntary settlements following feedback received.
Under the revised procedure, where it is considered that a penalty is appropriate, HMRC will consider abating the penalty potentially chargeable in accordance with the tax authority’s policy for abatement that applies to tax-geared penalties charged under the Taxes Management Act 1970.
Depending on the circumstances of the disclosure, it is possible, for example in cases involving spontaneous disclosure, that 100% abatement will be applied and the penalty will be reduced to nil.
The revised abatement policy took effect from 1 December 2014, but was only confirmed by HMRC on 6 January.
The revised procedure will apply to all ongoing and future compliance negotiations in relation to voluntary disclosure and chargeable event audits.
The updated guidance is available at https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/392445/Chargeable_Events_Penalties_for_Audits_and_Voluntary_Disclosures_Final_Approved_JA_Official.pdf