Andy, a Chartered Tax Advisor with the Essex and north London based LB Group, said that errors on tax returns or other documents that result in an understatement of tax liability could attract penalties of up to 100 percent of the sums owing.

For "carelessness" the penalty is likely to be up to 30 percent. For "deliberate errors" a penalty of between 20 and 70 percent is likely to be levied and between 30 and 100 percent for "deliberate concealment".

"If a penalty is levied because you have been careless, you could be entitled to a suspension of the penalty for up to two years, providing certain conditions are met and no other penalties are incurred during that time," Andy added. "But the other tougher penalties give out a strong message that giving misleading information will be punished more severely."

The new regime initially applies to Income tax, Corporation tax, Capital Gains tax, VAT, CIS, PAYE & NIC. According to HMRC, the penalties are designed to ´to ensure the penalty reflects the behaviour that gives rise to the error´.

More information can be found at www.hmrc.gov.uk/about/new-penalties/indew.htm

Contact: Andy Buchanan, LB Group, 82 East Hill, Colchester, CO1 2QW. Tel: 01206 867551. Email: andy.buchanan@lbgroupltd.com

Or Mark Middleton, LB Group, Number One, Vicarage Lane, Stratford, London, E15 4HF. Tel: 0208 221 8282. Email: mark.middleton@lbgroupltd.com