HMRC has been accused of demonising innocent taxpayers who make accidental errors on their self-assessment returns.
Data obtained under the Freedom of Information Act reveals the Revenue is more likely to conclude that where tax returns are incorrect, the individual has acted deliberately rather than by mistake. Critics claim HMRC has significantly “hardened” its attitude in an attempt to rake in more money.
Figures show that almost 15,000 penalties were attributed to deliberate actions during the 2013-14 tax year. This is compared to just over 5,000 in 2012-13. The proportion of fines issued for “deliberate behaviour” has risen from 9% to 16% in this period, suggesting a trend to place more blame on the taxpayer.
Mike Down, tax investigations expert at Baker Tilly, said: “Clearly, deliberately evading tax is a serious matter and HMRC is right to try and tackle it. By seeking more deliberate penalties, taxpayers are being hit harder and greater numbers of people are being put at risk of being named and shamed.”
Penalties for incorrect tax returns are calculated as a percentage of what HMRC claims is its potentially lost revenue (PLR). Errors that are the result of carelessness, where the taxpayer admits their mistake, could attract no fine whatsoever – though the Revenue does have the power to apply a charge of up to 30% of PLR.
At the other end of the scale, behaviour deemed to be “deliberate and concealed” could trigger a penalty of up to 100% of the taxman’s perceived loss.
HMRC denied it was using self-assessment fines to boost its coffers. It said: “We only issue penalties on the basis of a thorough examination of the facts. We want all taxpayers to get their returns right. The vast majority do so.”
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