Taxation (International and Other Provisions) Act 2010 section 30

Penalty for incorrect or uncorrected return

Section 30 sets out the penalties that apply when an interest restriction return submitted on behalf of a worldwide group contains inaccuracies due to carelessness or deliberate action.

• A company faces a penalty if an interest restriction return it submits contains an inaccuracy that either understates the total disallowed amount or overstates the interest reactivation cap, and the error was careless or deliberate.
• The penalty is calculated as a percentage of a notional tax amount — 30% for careless inaccuracies, 70% for deliberate but unconcealed inaccuracies, and 100% for deliberate and concealed inaccuracies.
• The notional tax is worked out by applying the average main corporation tax rate across the period of account to the total amount by which the disallowed amount was understated and/or the reactivation cap was overstated.
• A company is not penalised for errors made by its agent, provided the company itself took reasonable care to avoid the inaccuracy.