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07 November 2017
Point of penalties
Several colleagues have expressed concerns over how HMRC approaches penalties for incorrect returns. They believe that HMRC ‘threatening’ (their word) penalties when there is a technical dispute about a particular tax treatment undermines what should be a positive working relationship with the department. If challenged HMRC would probably say:
- If the tax finally due is greater than the sum declared the return is incorrect.
- It is necessary to consider in which category the error falls.
- The categorisation cannot be finalised until the enquiry is closed.
- The potential penalty is criminal for Human Rights Act (HRA) purposes.
- The client needs to be warned about the potential penalty as soon as it becomes a possibility.
At an intellectual level this analysis cannot be faulted but it fails to consider the...
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