Prompted vs unprompted disclosure in HMRC inaccuracy penalties (UK, 2026)

When HMRC opens a Stamp Duty Land Tax (SDLT) compliance check, the factsheet most likely to land on the kitchen table alongside the opening letter is CC/FS7a — Penalties for inaccuracies in returns. The factsheet sits on top of the inaccuracy-penalty regime in Schedule 24 of the Finance Act 2007, and the single most material variable inside that regime is the timing of any disclosure the taxpayer makes — specifically, whether the disclosure is prompted or unprompted.

This piece walks the prompted-versus-unprompted distinction in plain English, sets out the four penalty floors that follow, and ends with a worked SDLT example at the £500,000 transaction level. It is a factual explainer of how HMRC's published rules operate. It is not advice — readers facing a live compliance check should speak to a qualified solicitor or chartered tax adviser before responding to any letter from HMRC.

Why the distinction matters

Schedule 24 puts every inaccuracy that "leads to a tax loss" into one of three behavioural categories: careless, deliberate but not concealed, and deliberate and concealed. Each category has its own band of penalty rates, expressed as a percentage of the potential lost revenue (PLR) — the unpaid tax that the inaccuracy generated.

The bands are wide. Schedule 24 then gives the penalty officer a structured method for reducing the rate within the band, depending on (a) the timing of any disclosure the taxpayer makes and (b) the quality of the disclosure once made. The timing element — prompted versus unprompted — sets the floor of the band. The quality element (the three "TGH" components: telling, helping, giving access to records) determines where in the band the rate finally settles.

Get the timing right and the floor can drop to 0% on a careless inaccuracy. Miss the window and the floor is 15%. On a £500,000 SDLT transaction with a missed additional-property surcharge, that is the difference between a £0 penalty and a £3,750 penalty on top of the £25,000 of unpaid tax. The legal mechanic that draws the line is paragraph 9 of Schedule 24.

The statutory definition (paragraph 9, Schedule 24)

A disclosure is unprompted if, at the time the taxpayer makes it, they have no reason to believe that HMRC has discovered or is about to discover the inaccuracy. Any other disclosure is prompted.

The bar is the taxpayer's contemporaneous state of knowledge — not whether HMRC has, in fact, opened a check. A taxpayer who reads a CC/FS factsheet in the post and decides to come forward on the next inaccuracy in the same return is making a prompted disclosure on the second item, because the opening letter has put them on notice that HMRC is reviewing the filing. A taxpayer who reviews their own SDLT calculation a year after completion, spots an error, and writes to HMRC voluntarily is making an unprompted disclosure — because at the moment they wrote, HMRC had not opened anything.

The statutory wording is deliberately broad. HMRC's Compliance Handbook page CH82420 sets out the case the officer must build before treating a disclosure as prompted — typically a contemporaneous record showing that the taxpayer had seen an HMRC letter, factsheet, or media item that would have put a reasonable person on notice.

The four floors

The reduced floors set out in paragraph 10 of Schedule 24 work as follows:

Three observations.

First, the unprompted floor on a careless inaccuracy is zero. A taxpayer who realises, voluntarily, that their SDLT1 understated the chargeable consideration — perhaps because a fixtures-and-fittings line was over-allocated, or a non-resident surcharge was missed on completion — and writes to HMRC before anything triggers a check, can be reduced to nil on the penalty side. The unpaid tax and interest are still owed; the penalty element is the variable.

Second, the gap between the unprompted floor and the prompted floor widens as the behaviour becomes more culpable. On a careless inaccuracy the prompted-versus-unprompted gap is 15 percentage points. On a deliberate-and-concealed inaccuracy it is 20 percentage points (50% versus 30%). HMRC's published policy rationale is that the more deliberate the conduct, the larger the discount needed to incentivise the taxpayer to step forward early.

Third, the unprompted floor never disappears for a deliberate inaccuracy. Even a fully unprompted disclosure of a deliberate-but-not-concealed inaccuracy carries a 20% floor — and HMRC's Compliance Handbook (CH82440) confirms that the penalty officer cannot reduce below that floor even where the taxpayer's co-operation has been exemplary. The floor protects the deterrent function.

The "TGH" trio determines where in the band the rate settles

Once the floor is fixed, paragraph 10 directs the officer to reduce the penalty further within the band by reference to the quality of the disclosure. HMRC weights the three elements equally:

• Telling — admitting the inaccuracy, identifying the specific error in the SDLT1 (the box, the line, the chargeable transaction), and providing a full account of why the figure was wrong.
• Helping — actively assisting HMRC in quantifying the inaccuracy, including doing the arithmetic, computing the surcharge, computing the interest, and proposing the correct figure.
• Giving — providing access to records HMRC asks for, including correspondence with the conveyancer, the bank statement showing the deposit transfer, and the completion statement.

Each element is scored as a percentage of the band that lies above the floor. A perfect score on all three takes the penalty to the floor. A nil score keeps it at the ceiling. HMRC's case-officer guidance (CH82460) splits the band into 30% telling, 40% helping, and 30% giving — telling and giving each move the rate up to roughly 30% of the band, helping rather more.

What counts as a "prompt"?

The compliance literature has produced a small set of recurring prompt-trigger events. The list is not exhaustive — paragraph 9 is open-textured — but the most common in an SDLT context are:

1. An HMRC opening letter under Schedule 10 paragraph 12 FA 2003. This is the textbook prompt. See our SDLT enquiry window guide for the procedural backdrop.
2. A Schedule 36 information notice. A statutory information demand issued under Schedule 36 of FA 2008 is, by definition, notice that HMRC is examining the filing. We cover the notice and the appeal route in the Schedule 36 information notice penalties piece.
3. A media item that reasonably alerts the taxpayer to the issue. HMRC's practice (CH82420) accepts that a published HMRC campaign on a specific area — for example, a high-profile campaign on the £500,000 SDLT cliff — can render any subsequent disclosure prompted, if the officer can show the taxpayer was on notice.
4. A discovery assessment notice. A pre-existing assessment under FA 2003 Schedule 10 paragraph 28 already states HMRC's position and tax demand. Any disclosure in response is, definitionally, prompted.
5. Issue of a CC/FS factsheet bundle. Receipt of CC/FS1a and CC/FS2 in the same envelope is the practical event most often relied on by HMRC to date the start of the prompt period. The accompanying CC/FS factsheet index walks each factsheet in turn.

The contrast — what does not count as a prompt — is also instructive. A general HMRC press release about SDLT compliance does not, by itself, place a specific taxpayer on notice. A conveyancer's enquiry into their own file does not (unless HMRC has separately asked the conveyancer). A taxpayer's own internal review of a return that has not been queried by anyone external is the canonical unprompted disclosure.

Worked example — missed additional-property surcharge at £500,000

Take a £500,000 transaction where the buyer purchased the property in November 2024 as a buy-to-let through their own name but the SDLT1 was filed treating it as a main residence — a classic missed-additional-property-surcharge fact pattern. The standard SDLT on £500,000 in 2024-25 was £12,500; the same transaction with the 5% additional-property surcharge was £37,500. Potential lost revenue (PLR) is therefore £25,000.

In 2025 alone Land Registry pp-complete data shows 148,392 residential transactions completed at £500,000 or above across England and Wales (Land Registry pp-complete, fetched 31 May 2026). The £500k slab is where additional-property surcharge errors become materially expensive, because the 5% bites on the full purchase price rather than on the slice above £40,000 only — and a missed surcharge on a £500,000 transaction is therefore the standard worked example HMRC uses internally for inaccuracy training.

Now suppose the buyer realises the error eighteen months after completion. The penalty floor outcomes are:

The figures above are the floors, assuming a maximum-quality disclosure (a perfect "telling, helping, giving" score). HMRC's actual letter typically calculates the rate higher inside the band where the quality of co-operation falls short. The unpaid tax (£25,000) and interest accruing under FA 2009 section 101 sit on top — the penalty figure is incremental to those.

The headline takeaway is the behavioural gap. A buyer who realises an SDLT error first and writes in voluntarily can land at 0%. A buyer who waits for HMRC's letter pays at least 15%. The CC/FS7a factsheet, enclosed with the opening letter, exists precisely to put the recipient on notice of this gap.

Two procedural points the factsheet does not spell out

CC/FS7a is intentionally short — it is a public-facing factsheet, not an internal manual. Two procedural points relevant in SDLT compliance checks worth flagging:

The 30-day grace window for amending a return under Schedule 10 paragraph 6 FA 2003 is not the same as disclosure under Schedule 24. Amendment within 30 days corrects the return without engaging the inaccuracy-penalty regime at all. The penalty regime only bites where the amendment falls outside the 30-day window or where the original return is judged to have been inaccurate at the time of filing.

Penalty suspension under Schedule 24 paragraph 14 — covered by factsheet CC/FS10 — is only available on careless penalties, not on deliberate ones. The suspension route lets HMRC suspend the entire penalty subject to the taxpayer meeting specific conditions over a fixed period. A taxpayer landed at the 15% prompted-careless floor may be a candidate for suspension; a taxpayer landed at the 35% prompted-deliberate floor is not. The ECHR Article 6 protection attaches to penalty proceedings regardless.

What the published numbers tell us about the population at risk

HM Land Registry pp-complete recorded 848,775 residential transactions in 2025 across England and Wales, of which 760,361 sat above the £125,000 SDLT nil-rate band (Land Registry pp-complete, fetched 31 May 2026). Every one of those 760,361 transactions generated an SDLT return, and every one is potentially within scope for a compliance check inside the nine-month enquiry window under Schedule 10 FA 2003.

At £500,000 and above, 148,392 transactions sit in the price band where additional-property-surcharge errors become materially expensive. The Westminster postcode area alone accounts for a meaningful share of the highest-priced end of that population — the Westminster postcode page walks the per-postcode median for SW1A. HMRC does not publish per-year SDLT compliance-check volumes, but the Compliance Handbook confirms that risk-profiled checks are the default delivery mechanism, and the £500k slab is the segment where the prompted-versus-unprompted gap shows up most starkly on the bottom line.

The interaction with the discovery-assessment route

The inaccuracy-penalty regime sits alongside, not inside, HMRC's discovery-assessment power under Schedule 10 paragraph 28 FA 2003. The two regimes are linked: a deliberate inaccuracy that is also concealed can extend the discovery window to 20 years (paragraph 30(3)), so the same factual finding that puts a taxpayer in the 30%-100% Schedule 24 band can also re-open returns from as far back as 2006. The Supreme Court's reasoning on what "deliberate" requires runs through Tooth v HMRC — the same evidentiary threshold applies in both regimes.

When unprompted disclosure helps and when it does not

The unprompted route works at its best in narrowly-bounded inaccuracy fact patterns: a single missed surcharge, a single misallocated fixtures-and-fittings line, a single non-resident-day-count error. The taxpayer's account is short, the quantification is clean, and the records are all in the conveyancing file. A perfect TGH score is achievable, and the unprompted floor on a careless inaccuracy is zero.

The unprompted route is less effective on multi-year, multi-transaction patterns. The longer the period in which the inaccuracy persists, the harder it is to demonstrate that the original error was careless rather than deliberate. The longer the period, the more likely HMRC has already opened a parallel enquiry on another return — in which case the prompt clock may have started running on the disclosure now being contemplated.

Practical disclaimer

This piece is general explanatory information on how the prompted-versus-unprompted distinction works under Schedule 24 of the Finance Act 2007 and how HMRC's published Compliance Handbook applies it. It is not advice. Any taxpayer in receipt of an HMRC letter, CC/FS factsheet, or Schedule 36 information notice should speak to a qualified solicitor or chartered tax adviser before responding, and certainly before making any disclosure that the relevant disclosure paragraph in CC/FS7a will treat as either prompted or unprompted.

The SDLT calculator on the Homecost site can be used to model the underlying tax position on any transaction. The penalty layer modelled in this article sits on top of that base SDLT figure. For deeper procedural context, see the Schedule 36 information notice piece, the CC/FS factsheet index and other guides in the Cost Intelligence collection.