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HMRC Suspension Conditions

compliance check - careless inaccuracy

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HMRC looked into clients tax return for 17/18 and found that an item of carried interest was recorded in the incorrect box (client completed his own tax return for 17/18).

Client is now using our services to complete returns for 18/19 onw.

After going back and forth, HMRC have come to the decision that this is a careless inaccuracy and thus the penalty can be suspended based upon SMART conditions being in place.

We have an issue where HMRC will not accept any conditions suggested by us stating that these are not 'SMART'. Likewise the office cannot think of any conditions we could use either.

Any suggestions on previous experience with similar cases would be appreciated.


Replies (6)

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By SteveHa
09th Mar 2020 11:35

If this was an error on the taxpayer completed Return, why not simply suggest that the taxpayer will engage the services of a professional for a period of two years following the Return year?

That's worked for me before today.

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Replying to SteveHa:
By ash428
09th Mar 2020 11:41

We informally contacted the compliance officer who refused this on the basis that:
1 - not measurable and therfore not SMART
2 - If client appointed a tax advisor, it would still remain his responsibility to ensure that returns and accurate and correct.

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Replying to SteveHa:
Hallerud at Easter
09th Mar 2020 12:32

We also managed that back in 2016, a two year period where we would use professional advisers;that was the only condition applied.

On checking the correspondence suggests they were reluctant to apply a condition that had a cost implication to the taxpayer but as the suggestion was the taxpayer's they were willing to accept it.

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By Rammstein1
09th Mar 2020 11:54

Say that you will have a meeting with the client to go through each entry on their return. If HMRC does not agree to this, they don't know what they are doing and you need someone else to review the case.

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By ireallyshouldknowthisbut
09th Mar 2020 14:14

We have also had "use a chartered accountant" as a condition for 'careless error' which is in essence any error at all.

This was over 12 months ago, they seem to have really gone off the boil with suspensions recently, and the last one we had to actively ask for.

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By lionofludesch
10th Mar 2020 09:54

Penalty suspensions were a great idea but the legislation is, as usual, poorly thought out.

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