The number of penalties issued by HM Revenue and Customs for ‘deliberate’ mistakes on self-assessment tax returns has increased three-fold, Contractor UK reports.
According to a recent warning from accountancy firm Baker Tilly, the number of penalties handed out for ‘deliberate’ – as opposed to ‘careless’ – errors has shot up from 5,162 in 2012-13, to 14,401 in the last financial year.
HMRC was obliged to release these figures under freedom of information legislation. According to Baker Tilly, they indicate that the taxman is “getting tougher” on inaccurate return forms – particularly those that under-declare a person’s income.
“By seeking more deliberate penalties, taxpayers are being hit harder, the Exchequer is benefitting from higher monetary receipts,” explains head of investigations at the accountancy firm, Mike Down.
Current rulings, in force since 2008, mean that HMRC is entitled to charge a penalty for tax returns and related documents that feature either incorrect or inaccurate details, which have then resulted in tax being either understated, over-claimed, or completely unpaid.
The penalty amount has been decided according to the taxpayer’s behaviour as well as the Potential Lost Revenue. However, while some penalties fall into the categories of ‘error’, deliberate understatement’ or ‘deliberate understatement with concealment,’ the majority (80%) come under ‘failure to take reasonable care.’
As Down explains, in some cases penalties for mistakes that are considered careless can be suspended; but those which are deemed ‘deliberate’ are much more serious and cannot be postponed.
Self-assessors are also being warned that penalties for late submissions are also rising; meaning that as of April 30th, a penalty of £10 a day can now reach up to £900.