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HMRC have extended their penalty regimes from the 1st April 2010. From this date three new penalties may by applied:
Inaccuracy penalty
There is already a penalty for inaccurate tax documents and returns. This penalty will be extended to almost all taxes for return periods starting on or after 1 April 2009, for documents that are due to be filed on or after 1 April 2010.
Under the new system, HMRC will not penalise you if you take reasonable care to get your tax right. 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 HM Revenue & Customs (HMRC) promptly about any error you discover in a tax return or document after you've sent it
Failure to notify penalty
HMRC can apply a penalty if people don't tell them about a tax obligation at the correct time.
The failure to notify penalty will most commonly apply where people do not tell them at the right time that:
  • they are liable to tax because their new business has made a profit
  • their business's turnover has reached the VAT registration threshold
  • they sell an asset and make a capital gain on which tax should have been paid
  • they start a type of business that is required to register with HMRC - for example for Excise
  • their circumstances change in another way that affects their tax position
VAT and Excise wrongdoing penalties
HMRC will apply wrongdoing penalties where a person:
  • issues an invoice that includes VAT which they are not entitled to charge
  • handles goods on which Excise Duty has not been paid or deferred
  • uses a product in a way that means more Excise Duty should have been paid
  • supplies a product at a lower rate of Excise Duty knowing that it will be used in a way that means a higher rate of Excise Duty should be paid
This penalty applies to anyone registered for VAT or Excise, anyone who should be registered to pay VAT or Excise duties and to other members of the general public.
HMRC have stated that a persons behavior can affect the penalty and they may reduce the percentage they charge if:
  • they tell HMRC as much as they can about the additional tax that is due
  • they help HMRC work out what tax is due
  • they gives HMRC access to their records and calculations


The content and advice is for information only. Last updated 09.11.2010.

For up to date information and advice, based on your specific circumstances, please contact us.

We cannot be held responsible for actions taken with reference to the content contained on this website.


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