HMRC issues £1.87m in fines for tax mistakes

HMRC handed out 80% more penalties for errors on people's tax returns in the last tax year, with 83,317 fines issued for the tax year 2021/22.

HMRC charged a total of 18,757 taxpayers with a £100 penalty, totalling £1.87m in revenue.

While most penalties were issued in the year to the end of March 2022, most will relate to errors made in previous years, as tax returns and enquiries take time to process.

Many mistakes on tax returns likely came as people struggled to collect all the information required to fill out their tax returns due to lockdown measures and restricted access to offices.

Without all required data, some may have filed reports without including all relevant information or with incorrect estimates and calculations.

Due to COVID-19, HMRC took a more lenient approach to mistakes on tax returns, withdrawing 79% of penalties for 2021/22. This figure also rose in the 2020/21 tax year, from 40% in 2019/20 to 60%.

When HMRC suspends a penalty, conditions are imposed on the taxpayer, who must comply with them during the suspension period, and if they go against the guidance, then more penalties can be issued.

If taxpayers make constant mistakes on their returns, HMRC may suspect the errors are deliberate rather than careless, so the penalties may increase.

Ask us about your tax return.