A Fairer View on Penalties

For late submissions of self assessment tax return, HMRC has changed the way they charge penalties. Even when he spots a mistake in a tax return the way they charge penalties have changed dramatically.

Earlier this year it was announced that the HMRC is going to be very strict on late submissions and thus a new penalty scheme was announced. In contrast with the late filing penalties, HMRC has issued a surprise statement saying that he’ll reduce the amount of penalty where a mistake is made on a tax return, but only where a correction has been made on a subsequent tax return, or would have been made had he not spotted the error first.

For example, if someone reclaims £100,000 VAT on a purchase in period 1 when it should have been reclaimed in period 2, any penalty for the over claim in period 1 is not calculated on the £100,000 but on a reduced amount to take account of the automatic reversal of the inaccuracy in period 2.

However, the HMRC’s statement refers to the penalty applying to a “reduced amount”, but doesn’t say what this is or how it’s calculated In addition, the statement raises further questions as to what’s the penalty situation where you correct the original return rather than amend the next?

For clarifications on tax returns and filing your tax return with the HMRC, contact KVS Accountants based in Fulham. We are experienced tax advisors in Earlsfield, Chiswick, Southfields, Roehampton, Wandsworth, Chelsea, Clapham, Shepherds Bush and Richmond

 

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