An inaccuracy or failure to notify penalty starts at a standard percentage of the extra tax (30%, 70% or 100% depending on behaviour), and HMRC must reduce it to reflect the quality of your disclosure: telling HMRC, helping it quantify the tax, and giving access to records. HMRC’s guidance weights these 30%, 40% and 30%. The reduction can never take the penalty below a statutory minimum, which is lower when the disclosure is unprompted.

Which penalties can be reduced for disclosure?

The reductions apply to the two main tax geared penalty codes:

  • Inaccuracy penalties under Schedule 24 to the Finance Act 2007, for careless or deliberate errors in returns and documents, for deliberately supplying false information to someone else, and for failing to tell HMRC within 30 days that an assessment is too low. The reduction rules are in paragraphs 9 and 10.
  • Failure to notify penalties under Schedule 41 to the Finance Act 2008, for example not registering for self assessment or VAT when required. The reduction rules are in paragraphs 12 and 13.

Both use the same three part test. For background on the penalties themselves see HMRC penalties for tax return errors and failure to notify penalties. The reduction is mandatory: paragraph 10(1) of Schedule 24 says HMRC “must” reduce the standard percentage to one that reflects the quality of the disclosure.

What do telling, helping and giving access mean?

Paragraph 9(1) of Schedule 24 says a person discloses by telling HMRC about the inaccuracy, giving HMRC reasonable help in quantifying it, and allowing HMRC access to records to make sure it is fully corrected. Paragraph 9(3) says quality includes timing, nature and extent. HMRC’s Compliance Handbook fills in the detail:

Element Guide weight What HMRC looks for
Telling 30% Admitting the inaccuracy, disclosing it in full and explaining how and why it arose, with a positive approach that goes beyond reacting to questions (CH82442 to CH82448)
Helping 40% Positive assistance rather than passive acceptance: analysing expenditure, quantifying omitted sales, obtaining evidence such as bank statements, attending meetings, and volunteering relevant information (CH82450)
Giving access 30% Responding positively to requests, offering access to business and other records, providing copies, with rarely any need for formal information powers or reminders (CH82460)

CH82450 stresses that help must be useful and save the officer time, and that it is judged over the whole compliance check, so help given for only part of the time does not earn the full reduction. CH82460 says that if records exist that are not offered, the full reduction for access is not due. One action can count under more than one heading, and one failure or misleading act can cost points under more than one heading (CH82431).

What are the minimum penalties?

The statutory ranges for an inaccuracy that does not involve an offshore matter are:

Behaviour Unprompted disclosure Prompted disclosure
Careless 0% to 30% 15% to 30%
Deliberate but not concealed 20% to 70% 35% to 70%
Deliberate and concealed 30% to 100% 50% to 100%

Failure to notify uses the same ranges for deliberate failures. For a failure that is not deliberate, paragraph 13 of Schedule 41 sets two minimums. If HMRC becomes aware of the failure less than 12 months after the tax first became unpaid, the minimum is 0% unprompted and 10% prompted. After that, it is 10% unprompted and 20% prompted. Whether a disclosure counts as prompted is explained in prompted or unprompted disclosure.

How is the penalty percentage worked out?

CH82510 sets out the calculation:

  1. Score the quality of disclosure out of 100% across telling, helping and giving access.
  2. Find the maximum and minimum for the behaviour and type of disclosure, and take the difference. This is the maximum disclosure reduction.
  3. Multiply the maximum disclosure reduction by the quality score to get the actual reduction.
  4. Deduct the actual reduction from the maximum to get the penalty percentage.
  5. Apply that percentage to the potential lost revenue.

HMRC’s own example (CH82432) is Peter, who made an unprompted disclosure of a deliberate but not concealed inaccuracy, so the range is 70% to 20%. He scored 20% for telling, 25% for helping and 20% for giving access, a total of 65%.

Following the steps: the maximum reduction is 50 points (70 less 20); 65% of 50 is 32.5; the penalty is 70% less 32.5, or 37.5%. Illustration only: if Peter’s potential lost revenue were £10,000, the penalty would be £3,750. With a perfect score it would have been the 20% minimum, £2,000.

Can delay reduce the reduction?

Yes. For disclosures made after 5 September 2016, CH82465 tells officers to look at the time between the inaccuracy first occurring (the date the inaccurate document was given to HMRC) and the start of the disclosure. If that is more than 3 years, the officer normally cuts the maximum reduction by 10 percentage points before scoring telling, helping and giving access.

HMRC’s example is an unprompted careless inaccuracy with a range of 0% to 30%. With the restriction, the maximum reduction falls from 30 to 20 points, so even full cooperation leaves a 10% penalty instead of nil. The restriction applies even where the person simply failed to review their position. It may not be appropriate for a one off error the person would never have had reason to reconsider, but an officer needs a manager’s authority not to apply it.

When is the full reduction given without much effort?

CH82431 says that where little telling, helping or access is needed, the person should get the full reduction for the elements that are not required. If HMRC already holds reliable third party information that fixes the amount, a person who explains the circumstances, with enough detail to show the error is not part of a wider pattern, can qualify for the maximum for telling and helping, and for access if no further documents are needed.

How do offshore cases differ?

Where a deliberate inaccuracy involves an offshore matter, or any inaccuracy involves an offshore transfer, paragraph 9(1B) adds a fourth element: providing HMRC with additional information. Higher maximum and minimum percentages can also apply to offshore income tax and capital gains tax. See offshore penalties.

What mistakes cost people part of the reduction?

  • Waiting for HMRC to ask, which turns an unprompted disclosure into a prompted one and raises the floor.
  • Giving figures but no explanation of how the error arose, which limits the telling score.
  • Answering information requests late or only after a reminder or formal notice, which cuts the access score.
  • Producing schedules that the officer cannot verify, so the help does not actually save time.
  • Leaving an error for more than 3 years, triggering the 10 point restriction.
  • Assuming the size of a penalty at the statutory minimum can be argued down; only special reduction can go below it.

A careless penalty may also be suspended if suitable conditions can be set; see suspended penalties. For a voluntary route to disclosure see the Digital Disclosure Service.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.