New Penalties for Tax Errors
HMRC are introducing a new legislation outlining a penalties procedure that they say will make the tax system simpler and more effective. The penalties pertain to people that have made errors on their tax returns.
HMRC state that those who have taken reasonable care to properly and accurately complete their tax returns will not be penalised under the new regime. The intent is to support people who want to comply, and come down hard on people seeking to gain an unfair advantage through non-compliance.
To be liable for the penalties, a tax return document must contain an inaccuracy that leads to an understatement of the person’s liability to tax, or a false or inflated statement of loss or claim to repayment.
The penalties will be calculated based on the nature of the inaccuracy, and will stand as follows:
- A careless inaccuracy – 30% of the tax due
- A deliberate inaccuracy – 70% of the tax due
- A deliberate and concealed inaccuracy – 100% of the tax due
Initially the tax will affect documents relating to: VAT, PAYE, NICs, CGT, Income Tax and Corporation Tax and will be applicable to the returns period starting on or after 1 April 2008, with returns due on or after 1 April 2009.
It is expected that the 2008 Finance Bill will extend the regime to cover almost all of the taxes, levies and duties in this country.
For more information please contact John Oakley on 01394 279692 / 01394 287051
Ipswich
1-3 Elm Street, Ipswich, IP1 1EY
T: 01473 287051
Felixstowe
York House, 2-4 York Road, Felixstowe, IP11 7QG
T: 01394 279692
