Business News
The firm representing a self-employed Kent tradesman penalised for over claiming under the HMRC’s new penalty regime explains the background to the case.
McGrigors, the firm representing an unnamed taxpayer from Kent, have outlined how the individual faced a penalty after he miscalculated the size of his tax rebate. The claimant thought he was owed £3,000, when the actual amount was around £1,000.
Under the old penalty system, HMRC fined taxpayers who had either underpaid their taxes or were late submitting their returns. Under the new regime, the HMRC can now slap penalty charges on individuals or businesses for mistakes in tax returns, even if the taxpayer is owned money.
This new approach allows HMRC to impose a penalty of up to 30% for ‘careless’ mistakes and up to a massive 70% for mistakes they believe were deliberate.
Those who they believe to be deliberately misleading and have tried to conceal their actions could also face fines from 50% to 100% of the amount owed.
In this particular case, the individual from Kent was fined 70% of the £2,000 difference between the size of what he claimed and what he was owed, which amount to a huge £1,400!
Phil Berwick, Director of Tax Investigations at McGrigors, claims the individual did not deliberately file his return incorrectly, but had made a mistake regarding his CIS deductions.
Phil commented: “The tone of the correspondence was not appropriate for an unrepresented taxpayer, according to HMRC’s guidance, and there was no dialogue about the error and what category it should fall under. If HMRC accepts it was a careless mistake, the penalty should be suspended; because it could be capable of being repeated, it would fall within the suspension rules.”
The firm also went public with the circumstances of the case to highlight the way the new regime had been applied: “We’re looking to alert advisers and the general public that this has happened and to make sure HMRC applies the guidelines correctly.”
A HMRC spokesperson responded: “We can’t issue arbitrary penalties. It all depends on the individual’s behaviour. An individual who commits or conceals an error, for example, could expect a far higher level of penalty than an ordinary taxpayer.”
HMRC’s online FAQ on the new regime emphasises that their officers involved in compliance checks receive training on understanding the types of inaccuracy and behaviours as well as appropriate use of suspended penalties.
The case continues.
To ensure you avoid unnecessary penalties and successfully navigate the range of financial pitfalls out there, contact Suretax Accounting for impartial and professional accounting advice.
