HMRC tax investigation penalties range from being ordered to pay the tax owing, to unlimited fines and prison sentences, depending on the nature and severity of the taxpayer’s actions. To give themselves the best chance of receiving the most lenient of HMRC tax investigation penalties, many taxpayers seek guidance from expert HMRC lawyers like ours when facing an HMRC investigation. We offer commercially focused, cost-efficient advice with a view to resolving the issue as quickly and favourably as possible.

 

For a confidential free discussion, call us today on 01908 414990,  alternatively email us at Hello@altion-law.co.uk or complete our Free Enquiry Form and we will call you back.

 

Examples of some of the different types of HMRC tax investigation penalties include:

  • HMRC Tax Investigation Penalties for mistakes on Tax Returns, documentation or payments

 HMRC may impose a penalty if you submit documentation that contains mistakes. The penalty amount depends on the reason for your mistakes and whether they were due to your failure to take reasonable care, deliberate, or deliberate and concealed. The more serious the reason, the more severe the penalty will be. The current penalty rates are as follows:

  • For mistakes due to a lack of reasonable care, HMRC will impose a penalty of between 0% and 30% of the unpaid tax.
  • For deliberate mistakes, HMRC will impose a penalty of between 20% and 70% of the unpaid tax.
  • For deliberate mistakes you sought to conceal, HMRC will impose a penalty of between 30% and 100% of the unpaid tax.

HMRC might be persuaded to reduce the penalty if you work with them to put things right. We can advise you on the steps you should take to correct the problem and lessen the amount you have to pay. Those steps might include alerting HMRC to the errors before they become aware of them, helping HMRC calculate how much tax you owe, and providing HMRC with the information and documentation it needs to check the figures.

 

  • HMRC Tax Investigation Penalties for failure to notify

 If you fail to notify HMRC of any changes to your financial affairs that affect how much tax you need to pay, HMC may impose a ‘failure to notify’ penalty.

Examples of situations in which HMRC may impose a failure to notify penalty include:

  • You do not notify HMRC that your business has made a profit that makes you liable to pay tax.
  • You do not notify HMRC that your business has reached the threshold for VAT registration.
  • You do not notify HMRC that you have sold an asset on which capital gains tax is payable.

A failure to notify penalty is based on the amount of unpaid tax. HMRC may reduce the level of penalty if you tell them about your failure voluntarily and provide cogent documentation showing the true position.

 

  • HMRC Tax Investigation Penalties for VAT or Excise Wrongdoing.

HMRC may impose a wrongdoing penalty in several situations, such as when you charge VAT when you are not entitled to do so. It is calculated along the same lines as HMRC tax investigation penalties for mistakes, and HMRC can reduce the amount payable if you come forward and notify them of your wrongdoing.

 

  • HMRC Tax Investigation Penalties for serious Tax Evasion

HMRC’s primary concern is recovering unpaid tax. Accordingly, while it has a number of criminal powers at its disposal, it tends to reserve them for cases involving serious tax evasion or fraud. Instead, it concentrates on securing the repayment of tax owed to the revenue, together with penalties where appropriate.

However, if you suspect you have deliberately evaded paying significant amounts of tax, you cannot rule out HMRC pursuing a criminal conviction. While the decision to bring a criminal prosecution ultimately lies with the Crown Prosecution Service (CPS), HMRC can use its criminal powers, such as applying for and executing search warrants, to gather enough evidence for the CPS to build a strong case against you.

If you are convicted of tax evasion, your likely sentence will depend on the nature of your crime and its severity. For example, income tax evasion is punishable by an unlimited fine and a maximum of seven years in prison. By contrast, the particularly serious offence of cheating public revenue can result in an unlimited fine and life imprisonment. Cheating public revenue involves large-scale frauds calculated to defraud HMRC, such as moving funds offshore to avoid paying tax.

If you are concerned that you may have evaded tax, the sooner you address the issue, the better. HMRC has many tools at its disposal to identify tax evasion and is incredibly adept at doing so. By engaging with HMRC at an early stage, you stand the best chance of receiving a lenient penalty and avoiding criminal prosecution. If you need help, speak to us. Our specialist HMRC solicitors and barristers are superb negotiators and frequently secure excellent settlements on behalf of clients who have underpaid tax, whatever the reason.

 

For a confidential free discussion, call us today on 01908 414990,  alternatively email us at Hello@altion-law.co.uk or complete our Free Enquiry Form and we will call you back.