New measures have been introduced in the Budget that could see taxpayers pay penalties of up to 30% of any unpaid tax if they mistakenly mis-state their income in self-assessment returns.
Budget documents revealed that HM Revenue & Customs will be allowed to levy the fines if taxpayers 'fail to take reasonable care' when preparing tax returns.
Before the changes the penalty was only 5% of tax owed. Taxpayers who try and hide deliberate omissions from their tax returns face a 100% penalty.
The penalties will not apply to basic errors, but HMRC has cast the net wider than before so that penalties will apply to most cases when money is income is understated.
Advisers have been caught by surprise by the new powers as the consultation on HMRC powers closed less than a week before the Budget.
'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,' the ICAEW's Frank Haskew told The Independent.
Further reading:
Read the policy changes here
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