MISTAKE OR MISREPRESENTATION
Mistake or Misrepresentations
While tax law is extremely grounded in accuracy and factual data, mistakes can happen. If you can prove to HMRC that any mistake or misrepresentation in your tax return was wholly accidental, you may escape without a penalty. Be aware this is the exception as opposed to the rule, however, and the criteria for what is considered to be a reasonable and minor error is small. Happily, basic arithmetic mistakes do qualify.
This will require proof that you have taken all reasonable care to complete the tax return completely and with complete accuracy, but an error has somehow made its way into the process. It will also be essential that you work to rectify the error and provide accurate information yourself, which means that the onus will be upon you to identify the mistake and contact HMRC to notify them.
Doing so will suggest that you have made an innocent mistake, and as a result, you will be treated as such. However, if the error is a result of your own inaccurate record-keeping this is considered to be a failure to take reasonable care. This is not so easily excused and will lead to a financial penalty as detailed below. Do not ignore the error, or hope that it will go unnoticed. This is extremely unlikely to happen as tax returns are examined in forensic detail, and in doing so you leave yourself open to a penalty for failing to take due care and attention in reporting your financial information.
Of course, bringing in a tax professional to assist with this process will reduce the risk of encountering such an unexpected expense to zero or minimise the financial penalties in the unlikely event of an error.
Mistake or Misrepresentation
While tax law is extremely grounded in accuracy and factual data, mistakes can happen. If you can prove to HMRC that any mistake or misrepresentation in your tax
Failure to Take Reasonable Care
If HMRC deem an individual or business to have failed to take reasonable care in completing their tax return, it will be declared a moderate offence.
Deliberate Understatement
Deliberate understatement on a tax return is a serious offense and is considered to be a wilful act of fraud. At best, the penalty can be up to 70% of the extra tax due
Deliberate Concealment
Deliberate concealment is an attempt to tricking HMRC, and as a result, the consequences are extremely severe and the penalty can be as high as 300%.