Take reasonable care to avoid a penalty
We are introducing a simpler and more consistent penalty system for tax errors.
Under the new system if you take reasonable care to get your tax right, we will not penalise you, even if you make a mistake.
Most people take care to fill in their tax returns correctly and we want to encourage that. We use penalties to stop people who don’t take care from gaining an unfair advantage.
Taking reasonable care includes:
- keeping accurate records to make sure your tax returns are correct
- checking what the correct position is when you don’t understand something
- telling HMRC promptly about any error you discover in a tax return or document after you’ve sent it
If you don’t take reasonable care errors will be penalised, and the penalties will be higher if the error is deliberate. Disclosing errors to HMRC will substantially reduce any penalty due.
You should check your systems and records will help produce accurate tax returns.
When does the new system begin?
The new penalties apply initially to Income Tax (including Self Assessment), VAT, employers paying PAYE, National Insurance contributions, Corporation Tax, Capital Gains Tax and the Construction Industry Scheme.
They will apply for these taxes to errors in tax returns or other documents, for periods starting on or after 1 April 2008, that are due to be filed on or after 1 April 2009.
However, any returns that you are about to complete for the 2007-08 year, like Self Assessment returns, are subject to the existing penalties.
The new penalties for tax errors will be extended to most of our other taxes, levies and duties, for periods commencing from 1 April 2009, where the return is due to be filed from 1 April 2010.
Further information
- A simple summary of the new penalties
- Find out more about keeping records
- Frequently asked questions
- Technical guidance on the new penalties is in the Compliance Handbook
- Take our short online learning module to understand how the new penalties will affect you or your clients
- Agents' presentation on new penalties (PowerPoint document). Download and use this Powerpoint presentation, which you can tailor with the details of your practice, to show your clients how the new penalty system will work.
- Print leaflet To order copies of the leaflet please email: New Penalties including your name, quantities and delivery address
If after checking our further information you still have a query please email:
