Watson Buckle Blog
HMRC gets tough on tax returns
In an apparent push to reward those who complete their tax returns correctly and discourage those whose errors put them at an unfair advantage, HMRC is upping its enforcement of existing rules and introducing new ones.
Under the new system, HMRC will not penalise those who are deemed to have taken reasonable care over their calculations, even in the case where an error has been made. Reasonable care constitutes:
- keeping accurate records to make sure your tax returns are correct
- checking what the correct position is when you don’t understand something
- telling HMRC promptly about any error you discover in a tax return or document after you have sent it.
If reasonable care has not been taken, errors in tax returns and related documentation for periods starting on or after 1 April 2008, due to be filed on or after 1 April 2009, will incur a penalty.
The changes relating to tax returns dated on or after 1 April 2008, where the return is submitted after 1 April 2009, carry new penalties.
Tax returns for the 2007-08 year, such as self assessment returns, remain subject to the existing penalties.
The new rules will initially apply to income tax (including self assessment), VAT, employers paying PAYE, NI contributions, corporation tax, CGT and CIS.
Honesty is the best policy
According to the literature, penalties are steeper where the error is thought to have been deliberate.
Owning up to any oversights, however, i.e. ‘disclosing errors to HMRC’ will substantially reduce any penalty due.
Back to basics
While I respect HMRC’s wishes to rap the knuckles of those who claim ignorance (you know the ones I mean, those who fiddle their figures), it would help if the guidelines for tax returns and their submissions were crystal clear. Meanwhile, I fail to see how HMRC is rewarding those who go by the book and get it right in the first place.
My advice to HMRC, keep it simple. Go back, invest in getting the system right at the outset and you can avoid wasting time and taxpayers money on introducing penalties for abusing a system that ought to have been watertight in the first place.
John Kinsella
Watson Buckle
www.watsonbuckle.co.uk