HMRC are conducting research into common errors made in completing tax forms; we thought it would be helpful for them to hear what accountants have to say on the matter.

The plan is simple; remove the causes of common errors and it will narrow the tax gap, whilst also leaving HMRC free to devote more resources on fraud detection and prevention. 

What are the most common errors that you see in practice? Email Nichola and we will add them in below (your id will not be revealed).

HMRC’s known errors

Many people fail to sign and date returns or just fail to complete the whole form. 

PAYE returns

HMRC recently published a news release aimed at employers who keep using the wrong or made-up details for an employee

  • Names: using temporary name, for example calling someone “A N Other” or Mr X
  • Dates of birth: 40 people were apparently 200 years old this year
  • National Insurance number: contributions are then credited to the wrong person.

Self-assessment returns

In the past HMRC have revealed common mistakes including:

  • Failing to declare income such as employment because it is assumed it is dealt with under PAYE
  • Not declaring savings or investment income because it is assumed that as tax is deducted at source there is no other liability
  • Confusion over pension contributions: which box to use and which year

We also suggest:

  • Not realising that online registration takes weeks not hours
  • Not realising that some returns have to be done on paper

Investment section

  • Not declaring savings or investment income because an account was forgotten about/passbook mislaid.

Employee section

  • Claiming expenses as a deduction when no deduction is due.

Self-employment section

  • Using the cash basis
  • Failing to adjust for private use
  • Use of optimistic estimates for expenses (record keeping insufficient)

Form 42/P11D/PAYE

Shares given to employees/directors

Failure to appreciate that:

  • there may be a tax charge on acquisition
  • the shares may be restricted securities
  • a valuation is required

Corporation tax returns

Misunderstanding surrounding:

  • Associated companies
  • Capital losses
  • Clearances and Transactions in securities
  • Write off of loan relationship debits