Hmrc tax error who is affected

PAYE penalties for late and inaccurate returns. Missed VAT deadlines - penalties and surcharges. Corporation Tax penalties. Capital Gains Tax for property Disposals. Penalties can apply if your client does not tell HMRC if an assessment is too low. If you or your client sends in a document that contains a mistake, HMRC will charge a penalty if the error is:.

The level of the penalty is linked to the reason why the error occurred. The more serious the reason, the higher the maximum penalty can be.

HMRC can reduce the penalty if you or your client help them to put things right. Every individual or business is expected to keep records that allow them to give a complete and accurate return. For example, a client with relatively straightforward tax affairs may only need a simple system of record keeping that is regularly updated.

A large business with complex tax affairs is expected to have a more sophisticated system that is well-managed. Types of inaccuracy - What is reasonable care. If a penalty arises because of a lack of reasonable care, the level of the penalty will depend on the reasons for the error and the potential lost revenue PLR.

The PLR is an additional amount of tax which is due or payable as a result of correcting the inaccuracy. The penalty can be reduced if you or your client tells HMRC about the error. HMRC may make further reductions depending on the quality of the disclosure.

Penalties can be reduced by:. If your clients do not tell HMRC when changes happen that affect their liability to tax, VAT, or other duties, they may face a penalty. A penalty may occur, for example if your client does not tell HMRC , at the right time, that:.

This penalty is calculated on PLR which is based on the amount of tax or duty that is unpaid as a result of the failure to notify. Top links Housing benefit. Top links Template letter to raise a grievance at work. Top links Our pensions advice Write a letter to your creditors.

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NHS and adult social care complaints Find out how to complain about your doctor or health visitor. Top links Find your local Citizens Advice Volunteer with us Jobs in our network Press releases Our blogs Read what we're saying about a range of issues. As you may imagine this is easier for HMRC to assert if you have omitted income, for example, rather than if you were late notifying them of something. If you were to make a false entry in your records, then your action would be deliberate.

If HMRC then made enquiries about the false entry and you did not immediately confess to the deception, that deliberate action has been concealed. Concealment can also include other actions that cover up the truth, for example creating false documents or deliberately destroying documents.

Note that HMRC have 12 months from the date they establish the amount of tax lost to issue a penalty notice. If you wish to claim that you have a reasonable excuse, you must provide full details to HMRC. It may be that a combination of reasons, rather than any single reason, together may constitute a reasonable excuse.

If you claim reasonable excuse, it is important that you comply with the obligation in question without further delay — for example, submit a late tax return or pay outstanding tax. This is because the law on reasonable excuse requires you to remedy a default within a reasonable time after the excuse has ended. The reason behind your reasonable excuse must also have existed at the time you failed to meet the tax obligation — it cannot be something that occurred after the deadline although in some circumstances, a series of events could amount to a reasonable excuse overall.

For example, if your child was taken seriously ill just before you were due to submit a tax return, then that is likely to be a reasonable excuse for filing it late. But you would then have to submit the form as soon as possible after the situation was resolved. HMRC normally issue penalty notices automatically, so you must appeal a penalty if you wish to claim reasonable excuse. UK — these are examples only, and not comprehensive.

Do not be put off appealing or claiming reasonable excuse just because your situation does not exactly fit the examples given. Note that relying on someone else, for example, an employee or an agent does not normally enable you to claim reasonable excuse. If, however, you have relied on someone else to deal with some or all of your tax affairs because you are yourself seriously ill and the other person fails to meet the obligation or gets it wrong, the tax tribunal has found that you can have a reasonable excuse.

HMRC do not have the final word on whether or not an excuse is reasonable; that question is ultimately for the courts to decide. If you did not comply with a tax obligation because you were not aware you had to do so, this is not automatically considered a reasonable excuse.

Claims to this effect are normally resisted by HMRC. However, ignorance of the law can be a reasonable excuse, depending on the facts and circumstances. You will need to consider whether it was objectively reasonable for you not to have been aware of the relevant obligation, after taking everything into account.

If you think this applies to you but HMRC do not agree, then you could ask for an internal review or appeal to the Tribunal, or both. See our Tax appeals page for more information. In , HMRC confirmed that the coronavirus pandemic could be taken into account in evaluating whether you have a reasonable excuse for failing to meet a tax obligation. However, you must explain how the situation affected you and meant that you could not fulfil your obligation.

However, it might be that coronavirus social distancing or shielding measures prevented you from accessing information you needed to fulfil your tax obligations, for example. Falling ill with the virus itself might also be a reasonable excuse if it meant that you were unable to fulfil your obligations but then did so as soon as you were able to. The law defines careless, the first step in the penalty scale, as a failure to take reasonable care.

If your error is careless, it basically means that you meant to give correct information to HMRC, but made a mistake. They expect each person to keep the records that enable them to provide a complete and accurate return. They also expect people to check with HMRC or an adviser if they are not sure about something to do with their tax. If you do get someone to help you with your tax, you should keep a note of it.

For example, if you telephone HMRC, keep a note of the date and time, who you spoke to and what was said. This could help later if a penalty arises. You also cannot simply get someone else to help with your tax and let them get on with it, without checking — as best as you possibly can — what they have done. This does not mean that you have to understand everything about tax! But if, for example, you had given details of self-employment income to be included on a tax return and your helper had filled in your return without including that income, it would be reasonable for you to ask why it was not included.

Sometimes, you might not have the right information to be able to complete your tax return accurately. For example, you might have lost some important documents that you needed for your tax return and can never get them back though you should try your best to get copies, if this is possible. If you really cannot retrieve your records, you will have to make a best guess or estimate at the figures you should include on your return.

Give as much information as possible — usually in the additional information text box provided on the return. This could help to protect you from HMRC later suggesting you owe more tax or trying to charge you an inaccuracy penalty. This would happen where you know you have something to include on your tax return but do not yet know the correct amount. For example, Jean knows that she has some bank interest to include in her tax return. It is approaching the deadline for submitting her tax return.

She contacts the bank and they tell her it will take two weeks to send her the information she needs. She should submit the return with the provisional figure, so that she does not incur a late filing penalty. When the statement from the bank arrives, Jean will need to amend her tax return for the correct interest figure.

She can either do this by writing to HMRC with the information, or — if she filed online — she can go into her Personal Tax Account and amend the form and re-submit it.

If HMRC give you a penalty for a careless error, you can ask them to suspend the penalty. They can suspend a penalty for up to two years. Cookies on GOV. UK We use some essential cookies to make this website work. Accept additional cookies Reject additional cookies View cookies. Hide this message. Home Money and tax Income Tax. Tax codes. Tell HMRC about a change in income In most cases, HMRC will automatically update your tax code when your income changes, for example if you start a new job, start getting a pension or receive benefits or work expenses.