HMRC puts tax return errors into one of four groups
To understand how HMRC views and deals with tax return errors, it’s useful to look at how it categorises different types of error.
Here’s a breakdown of the terminology HMRC uses to describe these:
Reasonable care: ‘Reasonable care’ is the term HMRC uses to describe how everyone should file their return. In other words, anyone who submits a tax return should do everything they can to make sure it’s accurate.
Sure, mistakes can still happen – even if someone takes ‘reasonable care’ to make sure they don’t. But if HMRC can see that you did take care to avoid mistakes, they won’t hit you with a penalty.
HMRC says some of the ways you can take reasonable care over your taxes include:
- keeping enough records to make sure your tax return is accurate
- keeping those records safe
- checking with a tax adviser or with HMRC if you’re not sure about anything
Careless mistakes: If you don’t take reasonable care to keep your taxes accurate, and a mistake happens on your return because of this, HMRC will class this as a ‘careless’ mistake.
Unlike if you took reasonable care over your return, you can get a penalty for making a careless mistake.
Top tip: By using an intelligent tool like Finmo to track your income and expenses, you significantly lower your risk of making a mistake on your tax return. Finmo lets you link your bank account to our app so you can get a full view of your income and outgoings. Our software also means you can automate income and expense tracking, so you never miss a trick.
Plus, if you decide to file your tax return with one of our Self Assessment plans, you’ll have a dedicated tax expert and accountant to help you with every step of the process (for a fraction of the cost of a high-street accountant).
Deliberate inaccuracies: If you deliberately make errors on your tax return and submit it knowingly, HMRC will class this as filing a return with ‘deliberate’ inaccuracies.
Deliberate errors could be things like:
- saying your business expenses were more than they actually were
- saying you earned less than you actually did
You can get a penalty for submitting a tax return that you know is inaccurate (so, one with deliberate inaccuracies).
Deliberate and concealed inaccuracies: If you make deliberate errors on your tax return and actively try to hide these errors from HMRC, then HMRC will class this as filing a return with ‘deliberate and concealed’ inaccuracies.
Steps taken to hide these errors might include things like creating false invoices as evidence for business purchases that, in reality, didn’t happen.
Of course, you can get a penalty for making deliberate and concealed errors on your tax return.