If HMRC deem an individual or business to have failed to take reasonable care in completing their tax return, it will be declared a moderate offence. In these cases, a fine will always be the result. Obviously what is considered to be a deliberate lack or care is sometimes a subjective matter, though the final decision comes from HMRC. If you strongly disagree with this verdict, an appeal can be launched within 30 days.
A failure to take reasonable care could include failing to complete certain parts of the tax return or missing out a complete page, or failing to declare all income or expenditure that relates to a financial year though inaccurate bookkeeping. This is eligible for a fine because it does not involve a simple mathematical error that could happen to anybody; it will be the result of not capturing essential data.
You will be expected to keep – and provide – accurate, up-to-date records of every payment you receive that pertains to your business and is eligible for taxation, and you must also keep paper receipts for all expenses that you are declaring to be tax deductible. It’s important to note the difference between this practice and deliberately and intentionally failing to declare income. This is considered to be concealment, which is a more grievous offence.
If HMRC declare an error to be found on your tax return that the individual or business did not identify and seek to rectify themselves, a financial penalty of up to 30% of the extra tax bill can and will be levied against the individual or business that committed the offence. For business with a substantial turnover, this could be quite substantial and wholly unnecessary – bringing in the assistance of a tax professional may be a considerably more cost effective measure to prevent such mishaps from befalling you.