The importance of getting your tax affairs correct first time
HM Revenue & Customs recently introduced a new penalty regime for personal taxes, with the intention of making it easier for taxpayers to ascertain what penalties can be expected and when they will be imposed.
There have been articles in the papers recently concerning these penalties which are rather worrying. As an example, there was the self-employed man from Kent who completed his own tax return without assistance of an advisor, thought he was due a £3,000 refund, HMRC calculated that he was only due a £1,000 refund and charged him a penalty of £1,400, 70% of the difference, for the error!
HM Revenue & Customs guidance on the new penalty regime confirms that no one should be fined for making an 'honest mistake'. Although the taxpayer in question is seeking legal advice and appealing against the penalty, the importance of avoiding any mistakes which could give rise to a penalty in the first place has been made apparent in this and various other reported incidents.
To reduce your exposure to penalties you should ensure that you provide all information to your advisor as soon as possible after the tax year end and if you have any queries, or are not sure if something should be declared, let your advisor know as soon as possible so that your details are recorded accurately.
If you have any queries in relation to the new penalties, or if you require any assistance collating and providing to us your end of year tax return information, please contact your client manager who will be happy to help.
