Section 84

Tax shortfall penalty 

(1) This section applies to a person—

• (a) if that person knowingly makes a statement to an authorised officer that is false or misleading in a material particular or knowingly omits from a statement made to an authorised officer any matter or thing without which the statement is false or misleading in a material particular; and
• (b) if the tax liability of that person or of another person computed on the basis of the statement made by that person is less than it would have been had the statement not been false or misleading (the difference being referred to as the “tax shortfall”.

(2) Subject to subsections (3) and (4), a person to whom this section applies shall be liable to a tax shortfall penalty of—

• (a) seventy-five per cent of the tax shortfall when the statement or omission was made deliberately; or 

Deleted by Finance Act, 2019Effective 7th November 2019 

• (b) twenty per cent of the tax shortfall in any other case.

(3) The amount of a tax shortfall penalty imposed under subsection (2) on a person shall be increased by –

• (a) ten percentage points when this is the second application of this section to that person; or 
• (b) twenty five percentage points when this is the third or a subsequent application of this section to that person. 

(4) The amount of a tax shortfall penalty imposed under subsection (2) on a person shall be reduced by ten percentage points when that person voluntarily discloses to the Commissioner the statement or omission to which the section applies prior to—

• (a) discovery by the Commissioner of the tax shortfall; or 
• (b) the commencement of an audit of the tax affairs of the person to whom the statement relates,

whichever is the earlier.

(5) A tax shortfall penalty shall not be payable under subsection (2) when –

• (a) the person who made the statement did not know and could not reasonably be expected to know that the statement was false or misleading in a material particular; 
• (b) the tax shortfall arose as a result of a taxpayer taking a reasonably arguable position on the application of a tax law to the taxpayer’s circumstances in submitting a self assessment return; or 
• (c) the failure was due to a clerical or similar error, other than a repeated clerical or similar error. 

(6) A position taken by a taxpayer in making a self- assessment shall not be regarded as a reasonably arguable position for the purposes of subsection (5)(b) if it contradicts any of the following where they are in force at the time the self-assessment is made —

• (a) a public ruling; or 
• (b) a private ruling issued by the Commissioner to the taxpayer. 

(7) Despite subsection (5), the Commissioner or authorised officer may impose a late payment interest in respect of a tax shortfall when the tax is not paid by the due date for payment.

(8) For the purposes of this section, a statement made to an authorised officer includes a statement made, in writing or orally—

• (a) in an application, certificate, declaration, notification, return, objection, or other document submitted or lodged under a tax law;
• (b) in information required to be provided under a tax law;
• (c) in a document provided to an authorised officer;
• (d) in an answer to a question asked of a person by an authorised officer; or 
• (e) in a statement to another person with the knowledge or reasonable expectation that the statement would be passed on to an authorised officer.

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