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HMRC Tax Penalty and Dealing with HMRC

At the end of any HMRC investigation, if you are found to owe additional tax then you will be liable for a penalty.

HMRC Tax Penalties and Tax Evasion Penalties

Investigation penalties can be anything up to 200% of the tax due.

KinsellaTax have years of experience in dealing with HMRC investigations and negotiating a reduced penalty for our clients.

If you are under investigation by HMRC you NEED to get professional help straight away so you are not faced with a large penalty.

Penalties will not go away so the time to act is NOW.

HMRC will look at the reasons why tax has been underpaid and how much is due, which will determine the penalty you are liable to pay.

This will fall into one of four categories:

  • Mistake or Misinterpretation
  • Failure to take reasonable care
  • Deliberate Understatement
  • Deliberate Understatement and Concealment

Mistake or Misinterpretation

If you have made a genuine mistake which has resulted in an underpayment of tax, HMRC will see these as innocent errors and so will treat them as such.

There may not be a HMRC penalty for innocent errors, if your adviser can prove that the error was innocent and was uncharacteristic. In this case there may be no penalty charged.

Failure to take reasonable care

If a taxpayer makes a careless mistake such as failing to complete part of a tax return, forgetting to fill out a supplementary page of a return or not declaring part of their income. This would be seen as failure to take reasonable care.

This would not include basic arithmetic errors.

A HMRC investigation penalty for failure to take reasonable care is seen as a moderate offence and the penalty could be up to 30% of the tax due.

Deliberate Understatement

HMRC take a deliberate understatement of tax as a serious offence.

This is when a taxpayer knowingly and purposely omits information (or income) from their tax return for their financial benefit.

This would also apply if a taxpayer were to knowingly over-exaggerate expenses or allowances to benefit them.

The above both act as tax fraud and as such would be liable for a penalty of up to 70%.

Deliberate Understatement and Concealment

The most severe penalties that can be charged are for deliberately misleading HMRC when completing a tax return and then taking steps to hide or attempt to hide the fraud.

This can be done by destroying relevant documents, moving money to secret bank accounts and creating or amending false contracts or invoices.

This type of fraud is taken very seriously and can result in a penalty of up to 200% of the tax due.

HMRC investigations can cost thousands of pounds because of the penalties that HMRC can charge so you need specialised experience and committed advice that KinsellaTax bring.

How much will my HMRC tax penalty be?


Tax investigation penalties can range up to 100% on normal investigations and up to 150-200% of the culpable tax, this is what HMRC says is payable as a result of their investigation.

There are several factors that influence the HMRC penalty you could be charged.

The main factor that can influence penalties is an experienced negotiator, one who is fully aware of HMRC procedures and knows exactly how to deal with an investigation into your affairs.

Our team comprises of ex-Inland Revenue staff and ex-Customs and Excise staff who are fully experienced in dealing with HMRC penalties and negotiations.


Tax Investigation Penalties Process – 5 easy steps to reduce HMRC Penalties!


If you are under investigation and want to reduce your penalties then follow these 5 easy steps…

Step 1Click here to submit an on-line enquiry form or pick up the phone and ring 0800 471 4546 to speak to one of our penalties specialists.

Step 2 – Come and meet with your personal investigation specialist who will discuss the best way forward. You need to bring as much paperwork with you so we have the whole picture as to what your case is about.

You will need to sign an HMRC authority form called a 64-8. This is your permission for HMRC to discuss your case and liaise with us.

Step 3 – We will contact HMRC on your behalf to find out why they think you owe tax. This normally takes around 21 days and we will call you back as soon as we hear anything and send you copies of any correspondence with HMRC so you are up to speed.

Step 4 – Once we have a full breakdown of why HMRC think you owe additional tax we can put our arguments to HMRC. We will agree the liabilities due and negotiate fair penalties; these penalties depend on your co-operation through a an investigation. We will always co-operate fully with HMRC, giving you lower penalties!

Step 5 – Once a fair settlement has been agreed you will pay HMRC the tax due (along with interest and penalties) and go on to enjoy your life without the hassle of a HMRC investigation hanging over your shoulders any more.

We have helped ALL of our clients get reduced penalties. None of our clients have ever had the maximum HMRC penalties imposed on them of 100%, the normal charge, and where it involves overseas monies it can be 150-200%.


Sarah from London, a KinsellaTax client, said:


“Just to say a massive thank you to you, and to KinsellaTax for your professional approach and expertise, but more importantly for your ongoing support and reassurance through what has been a long and stressful process.

I felt out of my depth for most of the investigation but your excellent communication throughout has made sure I have known what was happening at every step of the process.

I am certain that the positive outcome of this case was due to your knowledge, experience and expert handling of this particular case, and for that I’m utterly grateful.”


To read more client testimonials click here


If you receive an investigation letter from HMRC, you can bet that if any tax is found to be due a penalty will be incurred.

Call 0800 471 4546 NOW and speak to one of our specialists to reduce your HMRC penalty.

KinsellaTax negotiate on our clients behalf to reduce your HMRC penalty and ensure that HMRC treat you fairly in every step of the investigation process.

We're here to help you. Call 0800 471 4546 for free condfidential help and advice 24/7
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