Tx notes fa22 Final

June 2023 to March 2024 exams
Watch free ACCA TX lectures
8. Penalties for incorrect returns 
The amount of penalty is based on the amount of tax understated, but the actual penalty payable is 
linked to the taxpayer’s behaviour, as follows:
(a)
there will be no penalty where a taxpayer simply makes a genuine mistake.
(b)
there will be a moderate penalty (up to 30% of the understated tax) where a tax payer fails to 
take reasonable care.
(c)
there will be a higher penalty (up to 70% of the understated tax) if error is deliberate.
(d)
there will be an even higher penalty (up to 100% of the understated tax) where the error is 
deliberate and there is also concealment of the error.
A penalty will be substantially reduced where the taxpayer makes disclosure, especially unprompted 
disclosure to HMRC.
See “Standard Penalties for Errors” in Rates and Allowances information provided in the exam
9. Information and Inspection powers 
These are as per VAT - see chapter 25.
You may now attempt Practice Question 38



---

169
Only on 
OpenTuition
you can find: Free ACCA notes 
•
Free ACCA lectures 
•
Free ACCA tests 
•
Free ACCA tutor support 
•
The largest ACCA community
June 2023 to March 2024 exams
Watch free ACCA TX lectures
Chapter 24
INHERITANCE TAX 
1. Introduction 
To be within the scope of Inheritance tax (IHT) there must be a transfer of value of chargeable 
property by a chargeable person.
Transfer of Value 
IHT is a cumulative donor-based tax. For it to arise, an individual must make a transfer of value i.e. a 
gift, which results in the reduction of the donor's estate. The loss to the donor principle is known as 
diminution and includes:
๏
lifetime transfers
๏
the wealth a person leaves when they die (their estate)
The amount of tax that may be payable on that gift/transfer of value is based on the cumulative 
amount of transfers made by the donor over a 7-year period.
Illustration 1 
A owns 60% of the shares in A Ltd. A Ltd has 100,000 £1 ordinary shares in issue.
Share valuations have been agreed with HMRC as follows:
20%
£10 per share
40%
£15 per share
60%
£25 per share
80%
£40 per share