Taxation (International and Other Provisions) Act 2010 section 33

Reductions in amount of penalty for disclosure or special circumstances

Section 33 of Schedule 7A explains how penalties for transfer pricing inaccuracies can be reduced where the company discloses the inaccuracy or where special circumstances exist, and sets out the minimum penalty levels that apply.

• Penalties can be reduced to reflect the quality, timing, nature and extent of a company's disclosure of the inaccuracy, but cannot fall below specified minimum percentages of the notional tax.
• Minimum penalties depend on the type of inaccuracy and whether disclosure was unprompted: careless inaccuracies range from 0% to 15%, deliberate non-concealed from 30% to 45%, deliberate concealed from 40% to 60%, and supply of false information from 40% to 60%.
• A disclosure is considered "unprompted" if, at the time the company comes forward, it has no reason to believe that HMRC has discovered or is about to discover the inaccuracy.
• HMRC may also reduce, stay or compromise a penalty where special circumstances exist, although inability to pay does not count as a special circumstance.