FHDDS51600 | Penalties, sanctions and offences: penalties – policy: Trading without approval - Calculating the penalty

From HM Revenue & Customs · VAT Fulfilment House Due Diligence Scheme

You should apply the following steps when calculating a civil penalty for operating a fulfilment business without approval.

Step 1

Calculate the percentage for the quality of the disclosure following the guidance at FHDDS51540 (a)

Step 2

Having established the behaviour and whether the disclosure was prompted or unprompted, identify

· the maximum penalty (b)

· the minimum penalty (c).

These are as follows:

Behaviour	Penalty range for unprompted disclosure	Penalty range for prompted disclosure
Deliberate and concealed	30% - 100%	100% (no reduction allowable)
Deliberate but not concealed	20% - 70%	35% - 70%
Non-deliberate	10%- 30%	20% - 30%

Step 3

Then calculate the maximum disclosure reduction (d).

(d) = (b) - (c)

Step 4

Calculate the actual reduction percentage for disclosure (e) by multiplying the maximum disclosure reduction (d) by the percentage for the quality of the disclosure (a).

Actual reduction percentage for disclosure (e) = (d) x (a)

Step 5

Calculate the penalty percentage (f) by deducting the actual reduction percentage for disclosure (e) from the penalty maximum (b).

Penalty percentage to be charged (f) = (b) - (e)

Step 6

To arrive at the amount of the penalty to be charged (g) apply the penalty percentage (f) to the maximum amount for TWA penalty.

Penalty chargeable (g) = £10,000 x (f).