Breaking: HMRC boss tells MPs ‘innocent errors’ aren’t penalised after Zahawi tax row

The chief executive of HM Revenue and Customs has told the public accounts committee that there are “no penalties for innocent errors” in an individual’s tax affairs. 

Jim Harra has told MPs that officials would help “in any way we possibly can” with the inquiry by the prime minister’s ethics adviser into Nadhim Zahawi’s tax affairs.

Harra said that he could not comment on an individual’s tax affairs, but signalled that HMRC could offer a more public comment on a minister’s tax affairs under certain circumstances.

Being careful to point out that he was not discussing anyone in particular, Harra also said: “Carelessness is a concept in tax law. It can be relevant to how many back years that we can assess, can be relevant to whether someone is liable to a penalty and if so, what penalty they will be liable to for an error in their tax affairs.

“There are no penalties for innocent errors in your tax affairs. So if you take reasonable care, but nevertheless make a mistake, whilst you will be liable for the tax and for interest if it’s paid late, you would not be liable for a penalty.

“But if your error was as a result of carelessness, then legislation says that a penalty could apply in those circumstances.”

He pointed out, to laughter from MPs, that “innocent” was not the term used in legislation.

“If you have been careless in your tax affairs, and as a result of that carelessness have made a mistake, then you could be liable to penalty.”