Mark McLaughlin looks at how penalties for careless errors in tax returns can be suspended and ultimately cancelled.
Tax compliance is difficult and complex. Making a mistake in a tax return is a distinct possibility for many taxpayers.
Was it a penalty?
The penalty regime for errors in tax returns, etc. states that no penalty is charged in respect of a tax return error if ‘reasonable care’ has been taken.
However, penalties can be charged by HM Revenue and Customs (HMRC) if a tax return error was ‘careless’ or ‘deliberate’. A deliberate error is more serious than a careless error, so the level of penalties for deliberate errors can be much higher than for careless errors.
The amount of penalty otherwise chargeable for a tax return error may be subject to a discount depending on the quality of disclosure by the