If you make a mistake on your tax return, you need to correct it as soon as possible, ideally within 12 months of the deadline for submitting the return. HMRC call such a correction an ‘amendment’ to the return. Tax returns for 2011/12 can be amended up until 31 January 2014.
If you need to correct your tax return for an earlier tax year, perhaps to reclaim overpaid tax, you can do this by writing to HMRC. But the earliest year you can now claim for is 2008/09, and those claims must reach HMRC by 5 April 2013.
Where HMRC discovers the error first, penalties and interest may be due. Penalties are levied for careless errors, or deliberate mis-statements. It’s a tough call trying to prove you took reasonable care (i.e. you weren’t ‘careless’) when completing your tax return, given that you still made a mistake.
Any penalty can be reduced if you deal with the mistake swiftly. You need to disclose it to HMRC as soon as the error comes to light, explain the reason behind the error, and pay the correct tax without delay. If the error was the result of a careless mistake, your ‘unprompted disclosure’ and full co-operation can reduce the penalty to zero.
Failing to deal with an error is likely to increase the level of penalty if HMRC find out about it later. So it’s important not to brush things under the carpet – if you think something may have gone wrong, it’s best to face up to it and take advice on how to put things right. We can only help if we have all the available information, so it’s important to put us in the picture.