What are the penalties for tax return mistakes and errors

For many, the self-assessment tax return deadline comes around too soon, and mistakes and errors can be common. This is especially true in the last few weeks before the tax return deadline when there is not enough time to double check your tax return. 

Where taxpayers make mistakes on their tax returns, the penalties that HM Revenue & Customs (HMRC) will apply can range from 0% to 100% of the lost tax revenue.  

Lost revenue is the additional tax due as a result of correcting the inaccuracy. Huge mistakes could therefore be very damaging financially. 

If you send a tax return to HMRC that has a mistake, a penalty will be charged if the error is: 

• Due to lack of reasonable care 
• Deliberate 
• Deliberate and concealed (i.e., you took steps to hide the error) 

The penalty is linked to the reasons above, with deliberate and concealed picking up the largest penalties. 

What are the penalties? 

• lack of reasonable care - the penalty will be between 0% and 30% of the extra tax due 
• deliberate - the penalty will be between 20 and 70% of the extra tax due 
• deliberate and concealed - the penalty will be between 30 and 100% of the extra tax due 

The penalty may be reduced if you notify HMRC of the error, and you are helpful in rectifying the issue. 

What should you do if you make a mistake on your tax return? 

You can amend your tax return if you make an error within 12 months of the tax return deadline date. Therefore, if you have any concerns about the accuracy of your tax return it is important you investigate this sooner rather than later. 

If you need to change your tax return and this deadline has already passed, you will need to write to HMRC. Your letter to HMRC should include: 

• Confirmation of the tax year your amendment relates to 
• Why you think there is an error 
• How much tax you think you owe/are owed 
• Your signature 

If you think you are owed tax, you will need to make an overpayment relief claim. An overpayment relief claim must be made up to four years after the end of the tax year it relates to. 

When making an overpayment relief claim, you must confirm in the letter you are claiming overpayment relief, sign a declaration to say you the details you are giving are “correct and complete to best of your information and belief”, and confirm if you have already made an appeal for the same payment. 

How can TaxAssist Accountants help? 

If you are finding it difficult to complete your self-assessment tax return or are worried about mistakes past and present, let our experts help. Call TaxAssist Accountants Croxley Park Watford on 01923 944287 or use our online contact form. 

Last updated: 22nd January 2025