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Where Taxpayers and Advisers Meet

fines and penalties for over claiming expenses

Posts: 1
Joined: Thu Jan 05, 2017 4:23 pm

fines and penalties for over claiming expenses

Postby JulieL » Thu Jan 05, 2017 4:33 pm

My husband has filed a tax return
The tax office is now asking for evidence of the expenses that he submitted thing is, he has none .
He did a self assessment and copied what the accountant he used the previous year as things were the same, he took a risk and it has backfired.
He tells me that he will be fined and that there are penalties, he has until mid January 2017 to get in touch
I know all this sounds vague but I'm unsure what to write as I know hardly anything about tax, I wanted to know how the Taxman penalises and fines, how they get this back, my husband says they will just take all his wages , we won't be able to pay rent or have any money to live on basically.
He has basically claimed for expenses that he wasn't entitled to .. Has anyone any advice on this matter

Adam Khan
Posts: 23
Joined: Mon Jan 30, 2012 11:19 pm

Re: fines and penalties for over claiming expenses

Postby Adam Khan » Fri Jan 06, 2017 8:37 am

I would advise you to firstly speak to an accountant, explain the situation. Work out the impact of the error? Ask the accountant what amount of tax should have been paid and was not. This will put you in a better position and you will know the minimum amount of payment that will need to be made.

You would need to look at the impact of the mistake made, what is the total of the expenses which were claimed and should not have been claimed?

Is your husband a lower rate tax payer or higher rate tax payer? The amount of tax would be approximately 20% (lower) or 40% (higher). It could be higher if he earns between £120k-£122k

In terms of how the taxman penalises and fines, this all depends on the type of error that was made on the tax return and if it appears it was deliberate. The fines vary. Another factor is how long ago the error was made, as interest would be applied from the outstanding due date.

In terms of taking the money back, once the taxman has completed the review and agreed the amount you need to pay. You could then agree when to pay, obviously the taxman would want the money asap (30 days usually) but if you could not pay you would need to work on agreeing a payment plan with HMRC.

It's best to tell the truth, that a mistake was made. That the previous years expenses were used again in error, do you have copies of the previous years expenses to send as back up? Work with the tax office to correct. Otherwise they will keep asking for more and more information. If you tell the truth the fines are lower but if it turns out you were not being truthful the consequences would be worse and fines would be higher.

Posts: 437
Joined: Fri Aug 07, 2015 2:17 pm

Re: fines and penalties for over claiming expenses

Postby SteLacca » Fri Jan 06, 2017 5:15 pm

You need to ensure that you respond before the deadline. Penalties are mitigated by being co-operative. If at the end there is a settlement, then the amount of any penalty will depend on how HMRC perceives the "error".

If they consider that it was simple error, then the penalty can range from 0% - 15% of the additional tax due. Being open, honest and co-operative should mitigate down to 0%.
If they consider that it was careless then between 15% - 30%. In such a case it is worth requesting suspension of the penalty (which will require some conditions to be met, but at least the penalty won't have to be paid)
If they consider it deliberate, or deliberate and concealed, then the penalty can be as much as 100% of any additional tax due.

Depending on how much is at stake, you may wish to engage a tax accountant to handle the enquiry for you. Estimates can still be accepted provided that they are reasonable, and a specialist may be able to successfully argue that no additional tax is due.

Don't panic about them suddenly leaving you without money. Typically they will require direct payment rather than them just taking it, and if it isn't practical to pay in one go he can make an arrangement to pay by installments.

Assuming that we are not talking about a kings ransom, chalk it up to experience and co-operate with HMRC as much as possible.

Posts: 1
Joined: Wed May 11, 2016 8:03 am

Re: fines and penalties for over claiming expenses

Postby illena » Wed Feb 01, 2017 12:19 pm

Please ignore this post - it has been retained only because other advisers have subsequently responded to correct it - TW Ed

Tax fraud is a federal crime with serious consequences and a crime that rarely stays hidden. No doubt it is a big mistake from your side. Now the best option is to contact your accountant and tell him all the picture. This will help you in the process. If you have to pay fine, don't be panic with the sudden loss of money.Once the taxman will complete all the formalities regarding the payment of amount and it seems to you that you have paid more income tax, it can be brought to the notice of HMRC later on and they’ll refund you the excess amount. Source:

Posts: 3069
Joined: Sat Feb 01, 2014 3:26 pm

Re: fines and penalties for over claiming expenses

Postby bd6759 » Wed Feb 01, 2017 4:52 pm

Don't let the above post worry you. It is just nonsense. HMRC has not accused you of fraud, and are not treating this as a crime.

Penalties are explained in ther factsheet FS7a. ... nts-ccfs7a

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Joined: Wed Aug 06, 2008 3:39 pm
Location: Operate Nationally but based in Aberdeen

Re: fines and penalties for over claiming expenses

Postby wamstax » Sun Feb 05, 2017 12:03 pm

I agree with bd that the post prior to his is absolute rubbish but the crux of matters is whether the expenses claimed were bona fides but he just doesn't have the evidence as he sees it OR whether the expenses claimed are totally fictitious and he would never get the needed evidence. The latter would merit the tag of fraud (although presumably HMRC would not contend that in normal local office compliance checks) and would fall into the deliberate category.
Again the amount incorrectly claimed would colour HMRCs view of the conduct involved (and also whether they would consider retesting or reopening earlier years.
regards and hope this helps
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