HM Revenue & Customs (HMRC) issued a record number of fines in 2016 to taxpayers who made mistakes on their returns. According to recent figures, the Revenue imposed 143,000 penalties on people who filed inaccurate information stating they had not taken “reasonable care”. The number is nearly three times that of 2012, where 55,000 fines were levied.
Between 2012 and 2016, the number of fines for deliberate understatement of income rose from 5,000 to nearly 30,000.
According to a report by the Times, figures indicate that the taxman is pursuing middle-earners with less complex tax affairs, rather than the very wealthy. However, HMRC denied this, saying that anyone who made an innocent mistake on their return, and who took reasonable care, would not pay a penalty.
“We will not charge you a penalty for an inaccuracy if you took reasonable care to get things right but your return or document was still wrong. Some of the ways you can show that you took reasonable care include: keeping accurate records, and checking with a tax adviser or with us if you are not sure about anything,” the HMRC website* reads.
In further news, research by the Association of Independent Professionals and the Self Employed (IPSE) shows that 41 per cent of freelancers are losing an average of two working days a year completing their annual self-assessment.
Commenting, IPSE Chief Executive, Chris Bryce, says: "Although the majority are able to complete their tax returns relatively quickly, many are spending too much time trying to get through to HMRC, and are often put on hold for considerable periods. There needs to be a much better line of communication between HMRC and self-employed people.
“Filling out your tax return can be a confusing process, and with the introduction of quarterly tax returns just around the corner, HMRC will be under a lot more pressure. It's essential that they provide the right advice and support, and importantly, make it easy for self-employed people to reach it. In April we will see changes to how freelancing in the public sector works. HRMC advisers are already under strain, and unwanted changes to IR35 legislation will only add to this.”
At Beavis Morgan, our diverse team of tax professionals are committed to ensuring that your tax reporting obligations are fully satisfied and that every opportunity to lawfully exploit tax savings is made known to you, restructuring your affairs in a tax effective and efficient way.
Our experts will take any future hassle of dealing with HMRC away from you, so you don’t need to contact them directly. We are also able to advise on all aspects of tax whether compliance or planning.
Contact Alan Ford for further information and assistance.