UK tax agency to ease some penalties
Saturday, November 25, 2017
A key job for all tax agencies is ensuring their citizens comply with the rules.
Most revenue offices, including the Internal Revenue Service, do that by penalizing folks who break tax laws.
It typically doesn't matter if you make an honest mistake, like transposing numbers when entering info from your W-2 to your Form 1040, or intentionally try to avoid paying your due tax.
When you mess up, you owe the unpaid tax amount, interest on the missed payment and a penalty.
Abatement allowed in some situations: Sometimes the IRS will abate a penalty. This could happen if you tried to comply with the tax law, but couldn't because of circumstances beyond your control.
Tax penalties that are eligible for this relief include:
- Failing to file a tax return,
- Failing to pay on time,
- Failing to deposit certain taxes as required, and
- Everybody's favorite catchall category, other penalties as applicable.
But in most cases, the U.S. Treasury is going to get some added money from you via penalty charges when you don't follow the tax laws.
Similar, but changing, tax rules across the pond: The United Kingdom's tax office, Her Majesty's Revenue and Customs (HMRC), also issues fines to taxpayers who violate that nation's tax infractions.
But Great Britain is tweaking its tax penalty system.
This week's Saturday Shout Out goes to HMRC officials who have announced the country's £100 ($119 U.S.) immediate fine for filing a late tax return will be replaced by a driver license-style points system.
The change is part of a series of U.K. Treasury reforms designed to focus on serious tax avoidance rather than punishing taxpayers who make simple errors, according to a report by The Guardian newspaper.
I'll let you check out the details in the story, but I do want to share HRMC's reasoning:
"We want to take a holistic approach and not penalize people who trip up and go after people who really don't care about playing by the rules."
That's an approach that our IRS and members of Congress now seeking to reform the U.S. tax code should take.
You also might find these items of interest:
- U.S. & U.K. share similar tax law complexity problems
- Unclaimed UK marriage allowance costing couples billions
- Beckhams, other UK celebs face possible tax bills in alleged tax avoidance film investment deal
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Posted by: MaxMargin Accountants | Wednesday, January 17, 2018 at 06:01 AM