A new report has shown that the HMRC have more than doubled the number of penalties that it hands out for ‘deliberate’ errors on tax returns.
31,500 of the harshest penalties were handed out to taxpayers compared to 14,400 5 years ago.
Some of these penalties can be up to 100% of what is owed to HMRC, leaving taxpayers paying double. This can put significant financial pressure on taxpayers with lower incomes, not to mention the stress this can cause.
In addition to the financial penalty itself, HMRC are likely to track these individuals on an ongoing basis to pick up future errors. This means that even small errors could be investigated and penalised in future.
How to avoid penalties:
- Consider appointing a qualified accountant to help with your tax returns
- Avoid HMRC ‘red flags’ such as overstating business expenses or understating earnings
- Ensure you are paying salaries including PAYE and NI
The most common type of penalty is for “failure to take reasonable care” and has a penalty of up to an additional 30% of the tax owed. HMRC imposed over 80,000 of these last year.
Overall, it is clear that HMRC is getting tougher and more aggressive when it comes to the accuracy of tax returns. The implications of this for taxpayers can be huge both in terms of cost and stress. Maintaining accurate records and having the right advice is key to ensuring that you avoid these issues.
Here at Barnett Ravenscroft, we can offer specialist support and advice to ensure that you avoid making costly errors. Get in touch with our friendly and experienced team to find out more.
You can get in touch via our contact form, call 0121 454 7241 or use the live chat below.
