Correcting mistakes in returns
What happens when somebody submits a tax return which is correct to the best of his knowledge and belief but then information comes to light showing it is wrong? This was the position facing a taxpayer in a recent First-tier Tribunal appeal (W Mikhail (TC5118)). He was a member of the NHS pension scheme and the growth in value of his pension fund needed to be taken into account in computing the annual allowance charge. The pension provider did not provide details until after the taxpayer had submitted his return. The issue emerged as part of a Revenue enquiry into his pension arrangements which resulted in additional tax being due.
The dispute concerned penalties. When the return was submitted the taxpayer did not have the relevant information and therefore the understatement was not careless. However HMRC relied on FA 2007 Sch 24 para 3(2) which states that there...
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