Extra penalties charged for tax return mistakes


Extra penalties charged for tax return mistakes

The latest data received from HMRC point to the fact that they are going to start seeing errors as being made on purpose, rather than just an honest mistake.

The number of fines that have been issued in recent years has gone up, as well as the sum of the charges of those who have returned a number of inaccuracies.

Some expert accounting professionals have considered HMRC to have taken a much tougher stance against inaccuracies for some time. The feeling amongst many is that HMRC are attempting to raise tax revenues by categorising mistakes that are sincere as being made intentionally.

Telegraph Money noted that statistics can support the theory. 2012-13 penalty notices were distributed to more than 5,000 for “deliberate” errors, which mean to deliberately underestimate revenues. This figure rose to nearly 15,000 in 2013-14. The percentage of sanctions issued due to intentional errors during that period, rose from 9 to 16 percent. Figures from tax research expert, Mike Down, were obtained under the Freedom of Information Act.

Initially he had believed HMRC officers had classed errors as a deliberate attempt to increase revenue, after the publication of information, he stated:

“Clearly, intentionally evading taxes is a serious matter and it is right the HMRC try to deal with this.

“By looking for more intentional penalties, taxpayers are being most affected and a greater number of people are in danger of being named.”

Tax error penalties

HMRC penalties will be charged to correct the flawed tax returns; the amount of which depends on whether the organisation believed it was authentic or intentional, alongside potentially lost revenues, or PLR. If it was an honest mistake and is corrected immediately, you may not have to pay the fine. If HMRC discovers that a mistake was made and the intention was to deliberately hide income, you can be charged with a penalty – potentially up to 100% of the tax due.

How are penalties calculated?

If you think you have taken reasonable care to fill in the declaration, no penalty will be charged. However, as a result of a careless error you could be charged a penalty of up to 30% of the total tax bill. If HMRC believes that mistakes have been made due to underestimated income, you may have to pay a fine of between 20 and 70%. Errors and deliberate concealments can be charged between 30 and 100% tax.
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