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If people take reasonable care when completing their returns but still make a mistake, they will not be penalised

This legislation introduces new penalties which aim to encourage and help people who try to get it right, but to come down hard on those who deliberately don’t.

Previously HMRC had a confusing variety of penalty charging powers which needed to be changed. The changes being made follow on from the Review of Powers consultation with HMRC’s customers.

The new penalties are initially for errors on returns and documents for VAT, PAYE, National Insurance, Capital Gains Tax, Income Tax, Corporation Tax and the Construction Industry Scheme. Self Assessment taxpayers are affected.

For these taxes, the new penalties apply to returns or other documents for return periods starting on or after 1 April 2008 that are due to be filed on or after 1 April 2009.

Under the new penalties:

• if people take reasonable care when completing their returns but still make a mistake, they will not be penalised
• if they do not take reasonable care errors can be penalised; the penalties will be higher if the error is deliberate
• disclosing errors to HMRC early will substantially reduce any penalty due.

Most people take reasonable care to get their tax right but it is important that all HMRC’s customers do this; if they do not, they may incur these new penalties for errors made during 2008-09 and later years.

Further information

For more information visit the HMRC website.

• New penalties for errors on tax returns and documents (opens new window)