20 Most Common Mistakes on the Tax Return

HMRC could enquire into a mistake or an error in your tax return, this could be a genuine mistake where the tax payer has taken “reasonable care” and is not a “deliberate” or “concealed” error. It is just in all likelihood down to a lack of knowledge when completing the tax return. Taxpayers do have to be careful however, as even genuine errors, could and do lead to penalty fines.

HMRC looks very closely at errors return4refund or mistakes on tax returns and deliberates on whether the error or mistake was genuine or due to a lack of reasonable care or deliberate and concealing. The latter two HMRC treat as the most severest and penalty fines can be one hundred per cent of the tax due and in the worse cases up to seven years imprisonment.

When processing tax returns, HM Revenue & Customs has found the ten most common mistakes are:

1. A ‘yes’ tick has been entered in one of the questions 1 to 9 on page 2 of the tax return but the supplementary page has not been forwarded with the tax return.

2. Failure to complete the self-employed pages, particularly on page SEF4 from box 64 onwards.

3. Detailing information on separate schedules instead of including the information on the return.

4. Entering manuscript notes on the return i.e. “per accounts” and/or “information to follow” instead of entering actual figures on the form.

5. Failure to complete a separate supplementary page for each individual employment.

6. Entering the net figure of employee personal pension premiums instead of the gross.

7. Entering the figure of capital expenditure in Box 48 of the Self Employment pages instead of the capital allowances (i.e. claiming excessive relief).

8. Failure to enter bank account details on TR5 of the core return where a repayment is due. The Revenue will assume you wish to leave the overpaid amount on your record, to be set against future liabilities – you have the right to choose.

9. Entering your pay in box 1 of the employment schedule but not entering any tax deducted in box 2.

10. If you fail to sign a paper return, it will be rejected immediately.

11. Depreciation is added to the tax return as an allowable expense when completing the tax return and has not been put into the disallowable common in addition.

12. The taxpayer has put in the full cost of a motor vehicle as an allowable expense and not carried out a capital allowance computation.

13. The taxpayer has put in the full cost of a piece of plant and machinery as an allowable expense and not carried out a capital allowance computation.

14. A capital allowance computation has not been carried out at all.

15. Personal Expenditure has not been “added back”.

16. In the event of a loss on self employment, it has been ignored.

17. Loss on rental income has been offset against other income during the year such as employment or self employment.

18. Proprietors drawings have been claimed as “wages”.

19. Interest is completed incorrectly and mistakes are made between gross interest received and net interest received.

20. The taxpayer forgets to make a claim for pension payments made during the year and effectively losing out on the taxable benefits of this.

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