Tax return deadline - get it done but get it right

26 January 2016

Mike Down

Sunday’s self-assessment deadline is fast approaching, and taxpayers need to get a move on if they haven’t already filed their return. But be warned, if you’re rushing to meet the deadline then you’re more likely to make mistakes – and that could prove to be very costly…With less than a week to go before the self-assessment deadline, taxpayers who haven't yet filed will need to get a move on.

But in the rush to complete their returns, taxpayers should not overlook the importance of accuracy.

HMRC may charge a penalty when a tax return or other document contains an inaccuracy, and the inaccuracy results in tax being understated or over-claimed.

The rate of a penalty charged by HMRC is based on the percentage of Potential Lost Revenue and is dependent on the behaviour of the taxpayer.

While the vast majority of penalties (more than 80 per cent) imposed for inaccurate tax returns fall into the ‘failure to take reasonable care’ category (which in certain circumstances, can result in a penalty being suspended), the numbers of penalties for 'deliberate' behaviour are on the rise.

An FOI request submitted by RSM last year found that the number of individual penalties imposed for 'deliberate' as opposed to 'careless' inaccuracies in tax returns almost trebled, rising from 5,162 in 2012-13 to 14,401 in 2013-14.

Crucially, these 'deliberate' penalties also grew as a proportion of the total number of penalties, suggesting HMRC is taking a much tougher line - with significant implications for those affected.

The ‘deliberate’ behaviour categories carry significantly higher financial penalties and do not allow any opportunity for a suspension of the penalty. They also increase the possibility that individuals will be ‘named and shamed'.

You have been warned!

If you would like to discuss any of the points raised further, please contact Mike Down or your usual RSM contact.