Introduction »

Penalty for pensioner

New style penalties were introduced, broadly, from April 2009 for ‘errors in tax returns’ and apply right across the different taxes. If the error arises due to a lack of reasonable care by the taxpayer, the maximum penalty is 30% of the lost tax but this may be reduced to 15% for a ‘prompted disclosure’ or 0% for an ‘unprompted disclosure’.

It has become clear that HMRC are taking a tough stance on carelessness for example, not doing what a reasonable person would have done in the same position.

In a recent case, an elderly lady was assessed for a penalty of £257.58 for a careless (albeit innocent) inaccuracy. She had attempted to do her own tax return and set a loss on income from property against her total income, which is not allowed. HMRC refused this and charged a 15% penalty for careless behaviour.

The lady argued that this was the first time she had filed a tax return online and, as the system had accepted her tax calculation and issued a tax refund, she assumed that all was in order. As a result, she believed that the issue of the penalty was harsh and unjust. However, the Tribunal found that the taxpayer had failed to exercise reasonable care when she completed her return!

We can help you to avoid these type of penalties arising in the first place, or at least, if they do arise assist in getting them reduced. Please give us a call if you are unsure on any taxation point before you send information to HMRC as there appears to be no sympathy from them if you make an error.

Introduction »