Tax returns face penalty hike
Taxpayers who mis-state income on their tax returns face heavy fines
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