How to Amend a Tax Return: HMRC Errors, Mistakes, Correction and More.

Even the most meticulous among us can make a mistake on our self-assessment tax returns.But what happens when you realise you’ve paid more tax than you should have, or worse, not enough?

Understanding HMRC’s error and mistake guidance can be your lifeline. In this blog, we’ll delve into the complexities of amending a tax return, from understanding the need for amendments to the types of inaccuracies that can occur.

We’ll also guide you through the correction regime, the penalties for careless or deliberate errors, and how far back you can amend a tax return. 

Why You Might Need to Amend a Tax Return

There are several reasons why you might need to amend a tax return. Perhaps you’ve realised that you’ve made a careless error or inaccuracy in your self-assessment. This could mean you’ve paid more tax than necessary, or conversely, not enough.

Another common reason is the discovery of an error after the tax year has ended. This could be due to an oversight or a lack of reasonable care when filing your tax return. In such cases, it’s crucial to update your tax details to avoid potential penalties.

You must wait 3 days (72 hours) after filing before updating your return. You can correct a tax return within 12 months of the Self Assessment deadline. Your tax bill will be updated based on what you report. You may have to pay more tax or be able to claim a refund.

Types of Inaccuracy in Tax Returns

Inaccuracies can occur in various forms. These inaccuracies, whether they stem from a simple misunderstanding or a deliberate misstatement, can have significant implications. Understanding the different types of inaccuracies is the first step towards ensuring your tax return is as accurate as possible.

Errors Made Despite Taking Reasonable Care

Even the most diligent taxpayers can make mistakes on their tax returns. These are known as errors made despite taking reasonable care. This type of inaccuracy occurs when you’ve taken all reasonable steps to ensure the accuracy of your tax return, yet an error still slips through.

It’s important to note that these errors are not due to carelessness or deliberate misstatement. They can happen due to a variety of reasons, such as a misunderstanding of complex tax laws or a glitch in the computer system used to file the return.

Careless Errors

Careless errors in tax returns often occur when individuals fail to take reasonable steps to ensure the accuracy of their information. These mistakes can range from simple mathematical errors to more complex issues like incorrect deductions or misinterpretation of tax laws.

It’s important to note that these errors, while unintentional, can still lead to penalties from the tax office. Therefore, it’s always advisable to take advice from a tax adviser or seek professional advice to avoid such pitfalls.

Deliberate Errors

Deliberate errors in tax returns are a serious matter. They occur when an individual knowingly and intentionally provides false information on their tax return. This could be a deliberate misstatement of income, expenses, or other details.

It’s important to take advice from a professional tax adviser if you suspect a deliberate error has been made. They can guide you on the reasonable steps to take to rectify the situation with the tax office. Remember, honesty is always the best policy when dealing with HMRC.

Correction of Errors in Tax Returns

The process of correcting errors, whether they’re on online or paper tax returns, is crucial to avoid potential penalties from HM Revenue and Customs (HMRC). This section will delve into the specifics of how to amend a tax return, providing you with the necessary guidance to rectify any mistakes.

Remember, it’s always wise to seek help from an accountant or tax adviser if you’re unsure about any aspect of your tax return. They can provide expert advice and help you navigate the government’s error and mistake guidance.

How to Correct Errors on Online Tax Returns

Correcting errors on your online tax returns is a straightforward process. Here’s a simple step-by-step guide:

It’s crucial to double-check your entries to avoid any further mistakes. If you’re unsure, consider seeking help from an accountant or tax adviser. They can provide expert guidance and help you navigate HM Revenue and Custom’s error and mistake guidance.

How to Correct Errors on Paper Tax Returns

Correcting errors on paper tax returns is a straightforward process, but it requires attention to detail. Here’s a step-by-step guide:

• Identify the tax year you’re correcting.
• Explain why you think you’ve paid too much or too little tax.
• Estimate how much you’ve over or underpaid.
• Sign the document (only you can sign on your behalf).
• If you’re making a claim for overpayment relief, include additional information:
• It’s crucial to get help with your tax if you’re unsure about anything. An accountant or tax adviser can provide valuable guidance to avoid any further errors and mistakes.

Penalties for Inaccuracies in Tax Returns

Whether it’s a careless error or a deliberate misstatement, HMRC has a system in place to penalise inaccuracies. 

Penalties for Careless Errors

Careless errors in your self-assessment tax return can lead to penalties. These are due if the error results in you paying less tax than you should for the tax year in question.

HMRC expects taxpayers to take reasonable care when completing their tax returns. If you’re found to have been careless, you may face a penalty, even if it’s an honest mistake.

Penalties for Deliberate Errors

Deliberate errors in your self-assessment tax return can lead to severe penalties. These are not mere careless inaccuracies but intentional attempts to pay less tax or claim overpayment relief unjustly.

HMRC’s error correction regime is stringent, and if they find you’ve knowingly provided false information, you could face a hefty tax bill. It’s crucial to take reasonable care when updating your tax details to avoid such consequences.

How to Avoid Penalties

• Always take reasonable care when filling out your self-assessment tax return. This means checking and double-checking all the information you provide to ensure it’s accurate.
• Don’t miss the deadline for submitting your tax return. If you realise you’ve made a mistake after the deadline, contact HMRC in writing as soon as possible.
• If you’ve overpaid or underpaid, update your tax bill promptly. Include the tax year you’re correcting, why you think you’ve paid too much or too little tax, and how much you think you’ve over or underpaid.
• If you’re claiming overpayment relief, provide all the necessary information and proof. This includes proof that you’ve paid tax through self-assessment for the relevant period and a signed declaration stating that the details you’ve given are correct.
• Remember, you can claim a refund up to 4 years after the end of the tax year it relates to. Don’t let a careless error or inaccuracy cost you more than it should.

How Far Back Can You Amend a Tax Return?

The period of discovery for amending tax returns can vary. Generally, if you’ve taken reasonable steps to avoid errors, you can amend a return up to four years after the end of the tax year it relates to.

However, in cases of deliberate misstatement or failure to take advice, the tax office may extend this period. Always consult a tax adviser for professional advice on these matters.

Consequences of Missing the Amendment Deadline

If you miss the deadline to amend a tax return, HM Revenue and Customs (HMRC) may impose penalties. The severity of these penalties often depends on the nature of the mistake on your tax return and the amount of extra tax due.

In some cases, you may be able to resolve the issue through alternative dispute resolution. However, it’s always best to seek help with your tax affairs from an accountant or tax adviser to avoid such situations.

How to Avoid Missing the Amendment Deadline

• Set Reminders: Use digital tools to set reminders for the amendment deadline. This will ensure you don’t forget to amend your tax return.
• Hire an Accountant or Tax Adviser: They are experts in HM Revenue and Custom rules and can help you avoid missing the deadline.
• Use Government Gateway: This online system allows you to manage your tax account and can help you keep track of deadlines.
• File on Paper: If you’re not comfortable with online systems, you can always file on paper. Just make sure to send it well before the deadline to avoid any postal delays.

What Does ‘Reasonable Care’ Mean When Amending a Tax Return?

‘Reasonable care’ is a term used by HMRC to describe the level of attention and diligence expected from a taxpayer when filling out their self-assessment tax return. It implies that you’ve made a genuine effort to accurately report your tax affairs, avoiding careless inaccuracies. If you’ve taken ‘reasonable care’, but still made an error, HMRC is less likely to impose a penalty.

However, if you discover an error after submitting your return and fail to inform HMRC, this could be seen as a careless error. The error correction regime is in place to handle such situations. By promptly informing HMRC about the mistake, you demonstrate ‘reasonable care’, potentially avoiding penalties.

Final Thoughts on Amending Tax Returns and Avoiding Penalties

Understanding HMRC’s error and mistake guidance is crucial to avoid penalties and ensure your tax affairs are in order. Whether it’s a careless error or a deliberate misstatement, taking reasonable steps to amend your tax return can save you from unnecessary stress and financial burden.

Remember, missing the deadline for amendments can lead to complications, so it’s always advisable to seek professional advice if you’re unsure.

While the process may seem daunting, it’s a necessary part of maintaining your financial integrity.

Lastly, while this blog provides a comprehensive guide, it’s always best to consult with a tax adviser or accountant for personalised advice tailored to your specific circumstances.