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Penalties for deliberate errors on the rise

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The number of penalties issued for ‘deliberate errors’ on tax returns rose for the third year running in 2016/17 to almost 34,100, according to PfP, providers of tax support and insurance. This compares with around 28,700 in 2015/16 and 20,700 in 2014/15.

Imposing penalties for deliberate behaviour allows HMRC subsequently to monitor a taxpayer’s affairs more closely for several years, increasing its chances of generating additional revenue from the same individual. Kevin Igoe, managing director at PfP, described these penalties as HMRC’s ‘latest weapon’ in its ‘relentless hunt for extra revenue’.

Igoe sees the rise in penalties for deliberate errors coinciding with a fall in the less severe penalties for failure to take reasonable care. ‘It is difficult to reconcile this increase with HMRC’s stated policy that the objective of raising penalties is not to collect extra cash but to encourage good behaviour in the future’, he said.