Calculating the Penalty

The stages for calculating the amount of the penalty are as follows:-

  • Identify the behaviour leading to the failure and whether the disclosure was prompted or unprompted;
  • Identify the maximum (a) and minimum (b) penalty;
  • Deduct the minimum penalty from the maximum penalty to work out the maximum permitted reduction for disclosure (c): c = a – b;
  • Work out the percentage reduction for the quality of the disclosure (d);
  • Apply the percentage reduction for the quality of the disclosure to the maximum permitted reduction for disclosure to work out the actual reduction percentage for disclosure (e): e = d x c;
  • Deduct the actual reduction percentage from the maximum penalty percentage to work out the penalty percentage (f): f = a – e;
  • Apply the penalty percentage to the potential lost revenue (PLR) to work out the amount of the penalty: amount of the penalty = PLR x f.

Example 1

A person failed to notify on time and did so more than 12 months late. The failure was deliberate but without concealment and the PLR is £5,000.

The disclosure was unprompted and the quality of the disclosure justifies a reduction for disclosure of 80%.

  • The failure was deliberate but without concealment and the disclosure was unprompted but more than 12 months late.
  • The maximum penalty is 70% and the minimum 20%.
  • The maximum permitted deduction for disclosure is 50% (70% – 20%).
  • The reduction for the quality of the disclosure is 80%.
  • The actual reduction percentage for disclosure is 40% (50% x 80%).
  • The penalty percentage is 30% (70% – 40%).
  • The penalty is £1,500 (PLR £5,000 x 30%).

Example 2

A person failed to notify on time but did so less than 12 months late. The failure was non-deliberate and the PLR is £5,000.

The disclosure was unprompted and the quality of the disclosure justifies a reduction for disclosure of 100%.

  • The failure was deliberate but without concealment and the disclosure was unprompted and made less than 12 months late.
  • The maximum penalty is 30% and the minimum 0%.
  • The maximum permitted deduction for disclosure is 30% (30% -0%).
  • The reduction for the quality of the disclosure is 100%.
  • The actual reduction percentage for disclosure is 30% (30% x 100%).
  • The penalty percentage is 0% (30% – 30%).
  • The penalty is nil (PLR £5,000 x 0%).


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