Overdrawn director’s loan accounts: A penalty problem

There are statutory time limits for notifying chargeability to various taxes, including the tax charge that can arise when a company director shareholder’s loan account becomes overdrawn. Don’t be late! The general time limit for a company to notify chargeability to tax (where HM Revenue and Customs (HMRC) has not given a notice to file […]

Penalties: Don’t take too long!

The penalty regime for errors in tax returns etc. (FA 2007, Sch 24) provides an escape from penalties if an error has arisen despite ‘reasonable care’ having been taken. Otherwise, the maximum penalty (i.e. 30% to 100% of ‘potential lost revenue’; or possibly higher if the error involves an offshore matter) depends on the type […]

‘Good’ or ‘bad’ tax advice?

HM Revenue and Customs (HMRC) will generally seek to impose penalties on taxpayers who (for example) have made tax return errors resulting in their tax liabilities being understated. However, it is important to note that HMRC cannot impose penalties for errors despite the taxpayer having taken reasonable care. Unfortunately, the tax legislation does not define […]

Do As We Say – Not As We Do!

The UK tax system can seem harsh, hostile and unforgiving if taxpayers make mistakes when dealing with their tax affairs, such as where tax return errors result in penalties. HM Revenue and Customs (HMRC) also makes mistakes. For example, procedural and administration errors sometimes occur when HMRC opens an enquiry into tax returns. Of course, […]

Don’t Let HMRC Reject You!

Tax returns can be difficult and complicated. Mistakes often happen when completing returns. Can HM Revenue and Customs (HMRC) reject an incomplete or incorrect tax return, send it back to the taxpayer for correction and treat it as never having been received, possibly resulting in late filing penalties? HMRC seem to think so. However, that […]

Penalties For Tax Return Errors – All Is Not Lost!

The penalty rules for errors in tax returns etc potentially apply if a tax return contains an inaccuracy that results in a tax liability being understated. In addition, a penalty can apply if an error gives rise to a false or inflated loss (FA 2007, Sch 24, para 1). Errors involving losses The amount of […]