Play ball with HMRC when it comes to tax errors and the latest penalty regime… or you could find yourself in deep trouble.

That is the warning from Sarah Moss, tax director at the Birmingham office of PKF Accountants & business advisers.

She is urging companies to make sure their systems are robust and secure.

Where firms are trying to deliberately mislead they will rightly suffer the consequences, but in the case of genuine errors it is best to be open and honest.

In such circumstances it should hopefully result in a zero, or very limited, penalty.

"Offer it up," said Ms Moss. "It is a much better approach than leaving it until HMRC finds it as part of its routine compliance procedures."

The new, tough, HMRC penalty regime was introduced last year.

Individuals and business owners can now face penalties of up to 100 per cent for deliberately underpaying tax and concealing this from HMRC.

The aim of the new regime is to encourage taxpayers to take more care when submitting tax returns and other documents, as well as to deter deliberate under-assessment.

The system applies to income tax, corporation tax, capital gains tax, VAT, PAYE, national insurance contributions and the Construction Industry Scheme.

Penalties are charged as a percentage of the extra tax due.

The rate of penalty increases according to how "bad" - in the view of HMRC - a taxpayers' behaviour has been.

So, no penalties apply if "reasonable care" has been taken; up to 30 per cent for "careless behaviour"; up to 70 per cent for "deliberate mistakes" and up to 100 per cent for "deliberate and concealed mistakes".

Ms Moss said: "HMRC may descend on you at any time, so be prepared. Don't wait until it happens.

"Companies need to review high risk areas now. Incompetence will be costly enough, but anyone who thinks they can cheat the system will now find that they will be dealt with more harshly than before.

"They shouldn't say they haven't been warned. So get your act together."

She pointed out that HMRC had made it clear from the outset what the parameters would be.

It stated at the time: "We have always charged financial penalties for incorrect returns or documents. However the way that penalties will be calculated in the future will be linked to the behaviour that gives rise to the error. Put simply, you will be fined more if HMRC deems any under-calculation of tax to be 'deliberate' - worse still if you have deliberately underestimated your tax liabilities and have taken 'active steps to hide the error'."

But it promised not to charge penalties when "reasonable care" has been made to get things right and an error had still been made.

Ms Moss added: "Every person is expected to make and keep sufficient records for them to provide a complete and accurate return.

"If individuals or businesses are unsure about any aspect, they must be able to show that they have sought specialist advice."