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HMRC to err on the side of wrath with penalties

Her Majesty’s Revenue & Customs is likely to be erring on the side of caution when it comes to penalties, deciding lenience is best for errors in tax returns.

The taxman seems to be hardening its heart when it comes to inconsistencies or errors on tax returns, making it more likely that it will simply assume that taxpayers are trying to get one over on it instead of just making an honest mistake. In fact, the latest penalty figures show that when it comes to inaccurate returns, HMRC isn’t only meting out higher penalties but more of them.

This is something that accountants have been suspected for quite some time, with many financial experts wondering whether the tax authority has made a conscious decision to draw in additional revenue through fines by deliberately classifying cases where errors were made by legitimate accident as those made with intent to engage in tax avoidance or otherwise diminish an individual’s tax responsibilities.

Whilst most people would simply dismiss such ideas as the rantings of a febrile mind that has been staying up late reading too many conspiracy theories on the Internet or late-night television, but the truth is there’s cold, hard figures to back this up. It turns out that in the 2012-13 rax year there were more than 5,000 taxpayers who were issued penalties for so-called ‘deliberate behaviour’ on their tax returns – yet in tax year 2013-14 this figure ballooned to nearly 15,000.

That’s one hell of a smoking gun if you ask me. But wait, there’s more – it turns out that when it comes to total penalties, those classified as ‘deliberate behaviour’ went from being 9 per cent of the total to 16 per cent. This has tax experts up in arms as it looks like HMRC is deliberately choosing to attribute more incorrect returns as calculated attempts at tax avoidance.

If this is indeed some scheme on the part of the tax authority to generate additional cash through trumped-up ‘deliberate behaviour’ penalties, this is truly reprehensible. Are you going to truly argue that the number of idiots tripled from one tax year to the other? Don’t be ridiculous – those figures stick out like a sore thumb, and something is definitely going on here that’s not aboveboard. I dare you to argue otherwise!

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