HMRC imposes more fines for willful corporate tax misinformation

The number of businesses fined by HMRC for deliberately obscuring corporation tax has risen to its highest level in four years, according to AM City.

The outlet revealed that HMRC penalized 62 businesses last year for deliberately sending incorrect information to potentially reduce the amount of corporation tax they pay, up 35% from 46 the previous year, according to a response to HMRC’s freedom of information request.

Despite rising volumes of fines, HMRC is reducing the amount of money it is asking businesses to obfuscate its tax affairs. The average tax penalty issued on corporations has fallen 72% over the past year to £4,845 from £17,454.

The total number of corporation tax fines rose to 100 last year from 86. The total value of fines issued last year fell to £485,000 from £1.5million.

HMRC sets the amount of a corporation tax fine depending on the seriousness of the tax return filed in error by a business. If a business deliberately submits incorrect information, HMRC can impose a fine of up to 70% of the tax due.

Experts said a drop in profits caused by the pandemic-induced economic shock could have lowered the value of fines imposed by HMRC.

Accountancy Today has contacted HMRC for comment.