What's New?

07.04.11 - Tax Return Fines & Penalties To Rise Steeply, HMRC says

Posted by Ben Williams on Thu, Apr 07, 2011 @ 02:17 PM

From now on, anyone who files their tax return late will have to pay much higher penalties than before.

Previously, filing your return after the annual 31 January deadline would lead to a £100 fine.

Now, extra fines will ratchet up at a rate of £10 a day, leading to penalties of hundreds of pounds.

Another big change to the penalty regime is that the fines won't be cancelled if the taxpayer owes no money to HMRC, because there was no extra tax to pay or because it had been paid.

"There are always a small number of people who have avoided filing or paying on time," said an HMRC spokesman.

"HMRC spends a lot of time pursing late returns and getting involved in unnecessary appeals work.

"The old £100 penalty was not much of a deterrent and these new penalties, which increase over time, will get people to submit returns as soon as possible," the spokesman added.

"No get out of jail"

The Fines

Under the new system, starting from returns for the 2011-11 tax year, there will still be the initial £100 fine for filing after the Jan 31 deadline.

For the next three months, the extra fines will be £10 per day, up to a maximum of £900.

For delays between three months and six months, the further fine will be a flat £300 or 5% of the tax due, whichever is higher.

And for returns filed between six months and 12 months late, there will be another flat charge of either £300 or 5% of the tax due (again, whichever is higher). In some 'serious' cases, the taxpayer may be fined 100% of the tax instead!

So, someone who failed to submit their return for 12 months would end up being fined, at the very least, £1,600.

'Discretion Needed'

There is no change to the additional scale of
interest and penalties for paying the tax late.

Taxpayers can still argue that they had a reasonable excuse for not meeting the filing deadline, which would potentially lead them to escape their fines.

To learn more about Income Tax 2011/12, click here. Or, if you think you could be stung by some of these higher fines and penalties, click here to Ask an Accountant, tell us your situation, and we will try to help.tax-rates-allowances-2012-2013-booklet

Topics: 2010/11, Tax penalties, penalties for filing tax return late, tax return penalties, tax return fines