Back to basics: An overview of the penalty regime

The wide-ranging changes to some of HMRC’s penalty regimes includes the expansion and new concepts in relation to penalties imposed for an incorrect tax return. The changes also affect penalties for failure to notify chargeability, as well as for the late filing of returns and late payment of tax for income tax self-assessment. The level of tax-geared penalty applied in a particular case depends on the behaviour demonstrated by the taxpayer as well as their ‘quality of disclosure’. There are also new increased penalties for offshore matters and the initiative to publish details of deliberate defaulters. These measures have potentially serious financial and reputational implications for any taxpayer who is found to be liable to a penalty.