Penalties levied by HMRC for deliberate tax return errors have risen by 19 per cent in 2016-17. These penalties are issued to taxpayers who the organisation deems to have deliberately made erroneous tax returns.

Last year, the number of “deliberate error” penalties issued was 34,100, which was an increase from the 28,700 issued in 2015 to 2016. The figures come from the tax support and insurance provider PfP. The fines were all issued as a result of HMRC’s belief that the taxpayer had intentionally submitted a tax return that they knew was wrong, or if the taxpayer, despite knowing that it was incorrect, did nothing to correct the error.

Deliberate errors not only carry a heavier penalty but the taxpayer may also be “named and shamed” by HMRC.

HMRC has been under pressure to increase the tax revenue in order to reduce the tax gap. One way of doing this is to impose higher penalties on those who try to cheat the tax system. HMRC collected an additional £34 billion in the last year.

With the ability to monitor taxpayers’ affairs closely, HMRC is able to collect extra revenue from the same taxpayer. Penalties for deliberate errors are just the latest weapon in HMRC’s armoury as it searches for more revenue.

As the number of penalties for deliberate errors has increased, the number for those levied for “failure to take reasonable care” has fallen. Such errors do not attract such a high penalty.

PfP said: “It is difficult to reconcile this increase with HMRC’s stated policy that the objective of raising penalties is not to collect extra cash but to encourage good behaviour in the future.”