Penalty Charges

Penalty charge is a rise in a variety of circumstances and a brief summary of them is below. In recent years the penalty regime has seen increases in the percentages charged for various inaccuracy situations. Cooperation with HMRC and the lack of any delays during the course of an enquiry, will substantially reduce your penalties. Penalties for late filing of returns and paperwork or late payment can be applied to any of these types of taxes – Self Assessment Tax Returns, PAYE/National Insurance, missed VAT deadlines, late returns under CIS and Corporation Tax.

More likely in tax investigation scenarios are the penalties charged for errors in returns. These are charged when you understate tax or misrepresent your tax liability.

If documents are misinformation and contain a mistake, HMRC will charge a penalty if the error is because of a lack of ‘reasonable care’, deliberate, such as intentionally sending incorrect information and deliberate and concealed for example, intentionally sending incorrect information, and taking steps to hide the error.

The level of the penalty is linked to the reason why the error occurred. The more serious the reason, the higher the maximum penalty can be.

Offshore Penalties

From 6 April 2011 HMRC can charge an increased penalty where an inaccuracy penalty, or a failure to notify penalty, arises and the income or asset that gives rise to the penalty is held outside of the UK. The penalty for failing to submit a return for 12 months can also be increased where offshore assets or income are involved. The level of the penalty depends on how readily the foreign jurisdiction shares information with the UK and only applies to Income Tax and Capital Gains Tax.