'Reasonable' tax errors no longer penalised

Tax payers who make a mistake on their tax form will no longer be penalised if they have taken reasonable care to get their tax right and the penalties on other errors will depend on why it was made.
 
Explains Denise Macrow of Barr Ellison’s tax team: “Only tax payers who make careless and deliberate errors or conceal something will be penalised and some careless errors won’t be penalised. The client must provide their agent with a full and accurate set of facts in adequate time to complete the return, review it and resolve any outstanding points in good time before the submission deadline. The penalty rate will depend on why you have made the error.”

Taking reasonable care includes;

• Keeping accurate records to make sure your return is correct
• Saving records to support your return in case of  enquiry at a later date
• Checking what the correct position is when you do not understand something or seek advice from a tax professional
• Telling HMRC promptly about any error you discover in a tax return after it has been submitted.

When penalties are charged they will be a percentage of any extra tax due along with interest. Careless error will be charged between 0 – 30%, deliberate between 20 and 70% and deliberate and concealed between 30 and 100%. Penalties can be suspended to give the taxpayer or company time to improve their record keeping and systems

HMRC will contact anyone with a penalty to pay to discuss their tax, the reason for the error and to explain why they are issuing a penalty. A penalty notice will then be sent. The tax payer has the right to appeal if they feel the penalty is unfair.

“As tax advisors we can help clients with the penalty process and their appeal against any penalty imposed,” says Denise.

To find out more, contact Denise Macrow or Judy Curtis on 01223 417200.

The information given in this article is of a general nature only and should not be considered as advice applicable to any particular situation for which specific request should be made to us.

"We would like to thank Sarah Payne for her help in our dispute with our buyer and former conveyancing solicitors. We have learnt a lesson and will now leave all our conveyancing to Barr Ellison."
Ivan and Sue Woodhouse

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