The number of people fined by HMRC for deliberate errors on their tax returns is up by 40% more than last year. The figure was revealed by a Freedom of Information request. All the individuals were fined for deliberately understating their income on their tax return.
In 2015-16 HMRC issued 28,663 fines for errors on tax returns, while in 2014-15 the figure was 20,740. In the 2012-13 tax year, only 5,162 fines were issued, which means that in the past four years the number of fines being issued has risen six-fold.
George Bull who is a tax expert at the accountancy firm RSM said: “It’s difficult to read the figures without drawing the conclusion that something has changed in HMRC’s approach to penalties. This spike in penalties suggests a marked change in attitude at HMRC and it is clear that inspectors are now taking a much harder line.”
HMRC has four categories of tax return errors. The first category is tax return errors that are not considered deliberate, the second is those that arise due to lack of reasonable care, the third is deliberate understatements, and the final category, which is the most severe, is deliberate understatement combined with concealment. The size of the fine that HMRC will impose will depend on how the tax return error is classified.
In a statement HMRC said that is does not set a quota or target for its investigators on the type or level of fines.