Tax & Accounting News
New Tax Return Disclosure Penalties
13/07/2009
HM Revenue and Customs has announced new penalties for inaccuracies in tax returns and other documents due for submission from 1 April 2009 for income tax, capital gains tax, corporation tax, PAYE, National Insurance (NI), Construction Industry Scheme (CIS) and VAT.
The level of penalty now depends on the type of inaccuracy, and the more serious the inaccuracy, the higher the penalty is. It also depends on whether the disclosure was unprompted – i.e. the taxpayer came forward voluntarily to disclose an error with no reason to believe HMRC was about to discover it – or prompted by HMRC. The penalty would be as follows:
- Where HMRC considers reasonable care was taken, despite the fact a mistake was made, no penalty will be due.
- Where HMRC considers the error was ‘careless’, the penalty may vary from 0% to 30% of the potential lost revenue for an unprompted disclosure, or 15% to 30% for a prompted disclosure.
- Where HMRC believes the error was ‘deliberate’, the figure is be 20% to 70% for an unprompted disclosure, or 35% to 70% for a prompted disclosure.
- Where HMRC considers the error was ‘deliberate and concealed’, the penalty would be 30% to 100% for an unprompted disclosure or 50% to 100% for a prompted disclosure.
Penalties for a ‘careless’ inaccuracy may be suspended for up to two years, and then cancelled if no more mistakes are made.
Taxpayers who disagree with a penalty can choose to have it reviewed within HMRC or can appeal against it to an independent tribunal.
More information is available at www.hmrc.gov.uk/about/new-penalties, or alternatively please contact us.
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