A new client has had a 'Check of your Self Assessment tax return 2014' letter indicating an underpayment of tax and has been hit with a 15% penalty which the letter states 'we agreed that you are due to pay a penalty of....'
The taxpayer was not a client at the time and completed the 2014 Return himself. The only entries where employment income one of which had a tax refund per the P60. The client entered the refund as tax paid rather than refunded resulting in the underpayment (approx £5k).
Does this amount to a careless error as the taxpayer has declared the full income?
On receipt of the letter the client contacted HMRC themselves and agreed the error. It also appears that they 'agreed' the penalty. Does this change anything in relation to an appeal (if considered appropriate)?