The UK’s largest businesses were hit with £59 million in fines by HMRC in the last year* for ‘careless’ behaviour in their tax affairs, says Pinsent Masons, the international law firm.
HMRC imposed the fines on businesses managed by the Large Business Directorate (LBD) for ‘Failure to Take Reasonable Care’ to ensure all information given is correct. The LBD oversees the tax compliance of 2,100 of the UK’s largest and most complex businesses.
Fines levied for ‘careless’ behaviour can be costly for businesses. If an error is first discovered by HMRC, the minimum fine is 15% of the additional tax HMRC believes it is owed, with a maximum amount of up to 30%.
HMRC issued a total of 199 fines for failure to take reasonable care in 2017, meaning on average each fine was for over £3.1 million.
Pinsent Masons explains that even the use of high-quality tax advisers to prepare tax returns does not necessarily prevent HMRC from imposing a fine for failure to take reasonable care for failings in this area.
HMRC believes that £5.9 billion in tax in 2016-17 was underpaid across all taxpayer groups purely because of careless behaviour, which partly explains why it is so aggressive in fining businesses.
Jason Collins, Partner at Pinsent Masons, says: “HMRC has shown it is prepared to punish even the biggest businesses for any careless errors made in their tax affairs.”