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Record number of fines issued to late filers

The number of fines issued for late Tax Returns has reached a record high, according to recent press reports.

A Freedom of Information request by the Daily Telegraph appears to suggest that HM Revenue & Customs (HMRC) has issued around one and a half million fines to late filers in the last year.

With the volume of penalties thought to have risen by 56% in five years, some experts have criticised the tax authority for ‘churning out fines all too indiscriminately’.

However, a spokesperson for HMRC has refuted the claims. ‘We want Tax Returns back not penalties, so nobody will receive a penalty where they file a Tax Return by the deadline or have a reasonable excuse for failing to do so,’ he said. ‘Penalties exist to encourage people to file on time.’

The findings come as HMRC prepares to introduce a new penalty regime for late Returns and late payments via Self Assessment.

Under the new system, the penalties for late Self Assessment Tax Returns are:

· an initial £100 fixed penalty, which will now apply even if there is no tax to pay, or if the tax due is paid on time;

· after 3 months, additional daily penalties of £10 per day, up to a maximum of £900;

· after 6 months, a further penalty of 5% of the tax due or £300, whichever is greater; and

· after 12 months, another 5% or £300 charge, whichever is greater. In serious cases, the penalty after 12 months can be up to 100% of the tax due.

New penalties for paying late are 5% of the tax unpaid at 30 days, at 6 months, and at 12 months.

Interest will also be charged on top of these penalties. The Tax Return deadlines remain unchanged – 31 October for paper and 31 January for online returns. The deadline for paying any tax due also remains the same at 31 January.

We can help you prepare your Tax Return for submission to HMRC – please contact us for advice.