Tax inspection penalty

[scribblesvurt]

Hello,

Just wondering what happens is you have an inspection and the Tax man disagrees with some items you have claimed for. What then happens? Do you just have to re-calculate without the disallowed items and pay the difference? Do you have to pay a fine? What's the general procedure?

Thanks.

[David Griffiths]

If the Revenue find a mistake, the tax will be recalculated, and you will have to pay the shortfall, plus interest.

You may also have to pay a penalty, depending on the circumstances of the "error". The amount of the error will depend on the visiting officer's assessment of how it arose. You are expected to take reasonable care in completing your returns and that includes taking steps to check the position if you don't understand something.

If the taxman thinks that you are careless, or that you are trying it on by including expenses that are not allowable, the penalty will be higher.

If the problem arises from deliberate action, then that's a new level of penalties

HMRC view of things here (http://www.hmrc.gov.uk/about/new-penalties/penalties-leaflet.pdf)