How to persuade HMRC that an error on your tax return wasn’t deliberate

This is the scenario: HMRC has claimed there are deliberate (rather than careless or innocent) errors on your tax return. But you dispute this, and want to take your case to the First-tier Tribunal (FTT). If you feel HMRC has wrongly categorised your mistake, taking your challenge to the FTT is worth the effort.

Any error on a tax return can result in an underpayment of tax. A P60 and P11D will cover all earnings/benefits in kind; did you take your figures from these, did your employer supply them? Do you know what counts as taxable income and, if you were made redundant, did you include any payment from an employer after your contract was ended?

HMRC expects that taxpayers can recognise when a situation is complex, such as redundancy, and so have taken “reasonable care” to put all the relevant figures on their tax return. The number-one tip is if you’re not sure, check – get in touch with HMRC itself, or speak with a tax expert. 

If you have had a previous return challenged you need to be even more careful (even if this past mistake was categorised as a careless, not deliberate error). HMRC will argue that you should have known better this time and followed all the steps to ensure you put the correct amounts on your tax return.

If HMRC alleges a deliberate error, this is a serious matter. The burden of proof is on HMRC to prove that you knowingly provided an inaccurate document, or made a conscious decision not to find out the proper tax treatment. Never forget that HMRC can go back 20 years to collect unpaid tax, plus interest and penalties, if it is able to prove a deliberate error. For careless errors, it can go back six years.

To persuade HMRC that you have made an innocent mistake, put yourself in its shoes. How does your behaviour look? Are you using clear, reliable and up-to-date information, are you following the guidance? Read HMRC’s advice on filling in tax returns carefully and query anything you are not 100% clear on. Do everything you can to make it hard for HMRC to argue that any mistake is deliberate. Show how you’re trying to set things right and that you did not intend to hide anything.

Accidents do happen, although facing a challenge to your tax return can be a highly- stressful experience. Keep calm, gather all the information you need and don’t be afraid to ask for help.

For help with business or personal tax planning, call Figurit (formerly known as Lansdell & Rose) on 020 7376 9333 or complete the form below.