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New penalties for tax errors

New legislation is to be introduced outlining a penalties procedure for those who make errors on their tax returns with the aim of making the system simpler and more effective, says Southampton-based chartered accountants HWB.

Tracy Jenkins, tax director for HWB, said: “The intent of the new legislation is to support people who want to comply, and penalise those seeking to gain an unfair advantage through non-compliance.

“To be liable for the penalties, a tax return document must contain an inaccuracy that leads to an understatement of the person’s liability to tax, or a false or inflated statement of loss or claim to repayment.”
The penalties will be calculated based on the nature of the inaccuracy.

A careless inaccuracy – 30% of the tax due

A deliberate inaccuracy – 70% of the tax due

A deliberate and concealed inaccuracy – 100% of the tax due

Tracy continued: “Initially the tax will affect documents relating to: VAT, PAYE, NICs, CGT, Income Tax and Corporation Tax and will be applicable to the returns period starting on or after 1 April 2008, with returns due on or after 1 April 2009.

“It is expected that the 2008 Finance Bill will extend the regime to cover almost all of the taxes, levies and duties in this country.”

HWB is one of the largest independent practices in the region. The firm offers advice and guidance to many small to medium-sized businesses in sectors including construction, healthcare, leisure and professional services.

Its 60-strong workforce includes a team of specialist tax advisers who work closely with clients on tax issues including corporate tax, inheritance tax planning and capital gains tax.