When does a penalty arise for an inaccurate Lifetime ISA bonus claim under Schedule 1, paragraph 5?

A penalty arises where a Lifetime ISA bonus claim contains a material inaccuracy and one of three conditions is met: the inaccuracy was careless or deliberate (Condition A), the claimant knew of the inaccuracy when making the claim but did not inform HMRC (Condition B), or the claimant discovered it later and failed to take reasonable steps to notify HMRC (Condition C).

What is the maximum penalty for a material inaccuracy in a Lifetime ISA bonus claim?

The maximum penalty for each material inaccuracy is capped at the amount specified in paragraph 40A(5) of Schedule 36 to the Finance Act 2008. Importantly, a separate penalty applies for each individual material inaccuracy within the same claim, so multiple errors can result in multiple penalties.

What does careless inaccuracy mean under this provision?

An inaccuracy is treated as careless where the claimant failed to take reasonable care when preparing or submitting the Lifetime ISA bonus claim. For example, not checking contribution statements before submitting would likely constitute a failure to take reasonable care, meeting Condition A and giving rise to a penalty liability.

How are penalties for inaccurate Lifetime ISA bonus claims assessed and enforced?

The procedures for assessing, appealing against and enforcing these penalties follow the existing framework in paragraphs 46 to 49 and 52 of Schedule 36 to the Finance Act 2008. HMRC uses the same processes applied to penalties for inaccurate information and documents, ensuring consistent rights of appeal and enforcement mechanisms.

Savings (Government Contributions) Act 2017 section Schedule 1 paragraph 5

Penalties for inaccurate bonus claims

Schedule 1, paragraph 5 sets out the circumstances in which a claimant who provides inaccurate information in a Lifetime ISA bonus claim may be liable to a penalty, and how such penalties are assessed and enforced.

A penalty may arise where a bonus claim contains a material inaccuracy that is careless (failure to take reasonable care) or deliberate
A penalty also applies where the claimant knew of the inaccuracy when making the claim but did not inform HMRC, or discovered it later and failed to take reasonable steps to notify HMRC
The maximum penalty for each material inaccuracy is the amount specified in paragraph 40A(5) of Schedule 36 to the Finance Act 2008, and a separate penalty applies for each individual material inaccuracy in the same claim
The rules on assessment, appeals and enforcement of penalties follow the same framework as penalties under paragraph 40A of Schedule 36 to the Finance Act 2008

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