FHDDS51605 - Penalties, sanctions and offences: penalties – policy: Trading without approval - Calculating the penalty - further example

Example 1

During a compliance check, we find a business has traded without approval but it was a non-deliberate contravention - the business did not know it was liable to register before we started our check. When we told them about the contravention, they agreed with us that they were required to register. This was therefore a prompted disclosure.

The penalty range for a non-deliberate contravention with a prompted disclosure is 20% to 30% of the maximum amount.

Step 1

The total reduction for quality of disclosure (telling, helping us, and allowing us access) was 70% (a)

Step 2

Identify the penalty range for a non-deliberate prompted disclosure (20% - 30%)

Step 3

Work out the penalty percentage rate by calculating the difference between the minimum and maximum penalty percentages. (d) = (b) – (c)

30% minus 20% = 10%

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).

10% x 70% = 7%

Step 5

We then deduct the percentage reduction from the maximum penalty percentage we can charge.

30% minus 7% = 23%

This gives us the penalty percentage rate 23%

To work out the amount of the penalty, we multiply the maximum amount by the penalty percentage rate. In the example above the penalty would be £10,000 x 23% = £2300.