Tax Collection and Management (Wales) Act 2016 section 136

Potential lost revenue: multiple errors

Section 136 sets out how the potential lost revenue is calculated when a person faces penalties for more than one inaccuracy, including the treatment of overstatements, understatements, and the order in which errors are corrected.

• When multiple inaccuracies attract penalties and the order of correction matters, careless errors are treated as corrected before deliberate ones, increasing the potential lost revenue attributable to deliberate inaccuracies.
• Where a person has both understatements (which understate tax) and overstatements (which overstate tax) relating to the same tax period, transaction or tax credit claim, overstatements may be set off against understatements when calculating potential lost revenue.
• Overstatements are set off in a specific order: first against non-penalisable understatements, then against careless understatements, and finally against deliberate understatements — so the relief benefits the least serious errors first.
• A reduction in one person's tax cannot be offset against a potential overpayment by a different person, unless legislation specifically links their devolved tax liabilities.