CH82345 - Penalties for Inaccuracies: Calculating the penalty: Losses impact on potential lost revenue calculation: Example - overstatement of losses increases the aggregate loss
You must check the date from which these rules apply for the tax or duty you are dealing with. See CH81011 for full details.
Company D, E, F and G are a group of companies.
Their returned results are
| 听 | 听 | 听 |
|---|---|---|
| D profits | 110000 | Less Group Relief 110,000 ( 110,000 surrendered by Company F) |
| E profits | 160000 | Less Group Relief 160,000 ( 90,000 surrendered by Company F + 70,000 by Company G) |
| F loss | -200000 | 听 |
| G loss | -85000 | 听 |
| Aggregate loss | ( 15,000) | 听 |
Company F鈥檚 return is found to contain a careless inaccuracy of 拢10,000. Its true loss is 拢190,000.
Company F must amend its Group Relief surrenders. Company F can and does withdraw its Group Relief surrender to Company E and makes a new surrender to Company E of 拢80,000.
Company G can and does withdraw its surrender to Company E and makes a new surrender to Company E of 拢80,000.
The inaccuracy has the effect of increasing the aggregate loss recorded for the group and the potential lost revenue (PLR) is calculated using the rules for losses, see CH82341.
The losses rules apply to the amount of Company F鈥檚 overstated loss.
None of the amount has been used to reduce the amount of tax payable. The unused loss rule applies to 拢10,000.
PLR for Company F鈥檚 penalty is 10,000 x 10% = 1,000.
If at the time the penalty is to be imposed Company G has used all or part of the excessive loss (拢10,000) to reduce tax liability in another period, the PLR is the additional tax due and payable when that loss is withdrawn.