hmrc

A moral tale:

The perils of a non-specialist dental accountant

My mother-in-law is a witch and put a curse on me! This extraordinary excuse was made by a taxpayer who had failed to file their tax return on time. We hope that the allegation his mother-in-law was a witch was made with tongue firmly in cheek! The allegation topped an HMRC poll in 2019 of the most weird excuses for a tardy tax return. The fact that staff at HMRC shared their favourite worst claims in a YouTube video (1)shows perhaps that the tax inspectors have a sense of humour.

But a good sense of humour is not the same as leniency. This brief blog brings a moral tale. HMRC expects everyone to take reasonable care of their tax affairs, and what is reasonable varies according to circumstances. Dentists, for instance, are regarded as intelligent and competent people and HMRC has high expectations of your conduct. So if you make a mistake, HMRC will come down on you heavily.

On a CPD update recently we heard of a dentist who employed a non-specialist dental accountant to do their tax; their adviser did not understand the intricacies of NHS pensions and annual pensions’ savings allowances and got the tax return wrong. The dentist had to repay the extra tax due plus a penalty for the lack of reasonable care, as HMRC felt that, given the extensive professional press and media coverage of the relevant issues, the dentist should have been aware of their liability.

The whole area of pensions savings annual and lifetime savings allowances are complex and we recommend that these should be managed for you jointly by your specialist dental accountant and independent financial adviser.

Penalties for inaccuracy can be compounded depending on whether it arises because of:

  • Lack of reasonable care: 0%-30% of the tax.

  • Deliberate: 20%-70% of the tax.

  • Deliberate and concealed: 30% to 100% of the tax

Trying to persuade HMRC that your mother-in-law is to blame for a failure to declare the correct amount of tax just won’t wash, even if it is made in jest! HMRC’s sense of humour just won’t stretch that far….

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