HMRC get tough on self-assessment taxpayer errors

HMRC get tough on self-assessment taxpayer errors

Thursday, 06 September 2018

HM Revenue & Customs (HMRC) have taken to highlighting their recent success rate in court actions and litigation in warning letters to taxpayers, deterring them from letting the case reach court. This has led to more and more taxpayers settling up with HMRC to avoid lengthy and expensive court cases.

HMRC returns from personal tax investigations have jumped by 64% in the last year as they have collected £1.4 billion in 2016/17 from investigations into self-assessments by individual taxpayers, a steep rise from the £856 million collected in 2015/16.

These investigations have been one of the fastest growing revenue streams for HMRC.

Increase in HMRC fines for ‘deliberate errors’

Added to this, the number of penalties imposed by HMRC on taxpayers for making a ‘deliberate error’ on their tax return increased by 19% to 34,000 in 2016/17.

Fines are handed out to taxpayers when an error on a self-assessment return is deemed to be deliberate, or a known error is not corrected. This would include supplying false information or deliberately withholding information in connection with a return. It could, for example, include not disclosing rental income unless you can successfully argue that this was a careless rather than a deliberate omission. 

However, HMRC are definitely pushing for more deliberate penalties. In 2012/13 HMRC issued around 5,000 deliberate action penalties. By 2015/16 that figure had increased to 28,663!

The increase in penalties reflects HMRC’s renewed hunt for revenue. Deliberate penalties carry much higher penalties than those HMRC consider to be careless, so they are a great revenue earner for the tax authorities.

Imposing penalties for deliberate errors also means that HMRC can monitor that person’s tax affairs for years to come, a decision the taxpayer cannot appeal.

You can protect yourself against the cost of most tax investigations by subscribing to our Tax Fee Protection Service. By paying a small premium for cover you won’t have to pay out before a case reaches court and we will fight the investigation on your behalf. To find out more, call 0330 024 0888 or email

John Weston


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