HMRC levies penalty on inaccurate tax return

Date: 19th April 2010

New powers bestowed to HM Revenue & Customs (HMRC) with regard to inaccurate tax returns have been exercised.

A Kent-based self-employed tradesman has been fined £1,400 due to inaccuracies in his tax return calculation, accountingWEB.co.uk reported.

McGrigors, the firm representing the taxpayer, told the news provider that the penalty was charged as its client had estimated they were due a £3,000 rebate, but were in fact only owed £1,000.

Under new rules HMRC can fine taxpayers for inaccuracies, even if that person is owed money.

HMRC can levy fines of up to 30 per cent for careless mistakes and between 30 per cent and 70 per cent for deliberately misleading tax returns.

If the taxpayer has also concealed the fact that they are making inaccurate calculations, the fines can increase up to 100 per cent of the amounts owed.

Phil Berwick, director of tax investigations at McGrigors, told AccountingWEB.co.uk: We found [the case] so outrageous, we gave the accountant some pro bono advice.

"It may well be a one-off where an individual officer has applied the rules wrongly, but if officers across the country feel this is how they need to behave, that would be a concern."

Posted by Anthony Burns