Tx notes fa22 Final

Taxpayer behaviour
Maximum penalty
Minimum penalty - 
unprompted 
disclosure
Minimum penalty - 
prompted 
disclosure
Deliberate and concealed
100%
30%
50%
Deliberate but not concealed
70%
20%
35%
Careless
30%
0%
15%

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13
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Chapter 1
THE UK TAX SYSTEM 
1. The overall function and purpose of taxation in a modern 
society 
1.1. Economic factors 
Spending by the government and the system of taxation impacts on the economy of a country.
Taxation policies have been used to influence economic factors such as employment levels, inflation 
and imports/exports.
Taxation policies are also used to direct economic behaviours of individuals and businesses. 
For example, they encourage individual saving habits (Individual Savings Accounts, savings income 
and dividend income nil rate bands) and giving to charity (Gift Aid Scheme).
Further, they may discourage motoring (fuel duties), smoking & alcohol (duties and taxes) and 
environmental pollution (landfill tax).
As government objectives change, taxation policies may be altered accordingly.