Penalty increase for incorrect tax returns

The government has introduced new penalties for taxpayers who incorrectly state their income on self-assessment forms.

Under plans outlined in last week's Budget taxpayers will be liable to pay fines of up to 30 per cent of unpaid tax if they "fail to take reasonable care" when filling out tax return forms.

Currently, taxpayers who mistakenly understate their income face fines of five per cent - those deliberately omitting information are liable to pay a 100 per cent fine.

"There are lots of concerns about the additional powers being awarded to HMRC, because in many cases it is very unclear how they will be applied," Frank Haskew of the Institute of Chartered Accountants commented.

Mr Haskew said tax advisers were concerned over the changes being introduced just six days after consultation ended.

The next deadline for self-assessment tax returns is April 6th.

According to HMRC, taxpayers completing their returns online are at a "significant advantage" - with automatic calculations, email reminders and immediate acknowledgment that forms have been received.