Tax Return Penalties for Half a Million Non-filers

Late payment penaltiesAround 500,000 people who still haven’t filed their 2010/11 tax returns will be receiving penalty letters from HM Revenue & Customs (HMRC) this week.

The penalty letters will demand a minimum of £1,200 including the maximum £900 in daily penalties for non-payment of tax returns plus an additional £300 or 5% late filing penalty, whichever is highest.

The new penalty regime was introduced in 2011 as an incentive to file tax returns, reducing the burden to taxpayers of the cost of chasing up late returns.

As a result of the threat of higher fines, the number of outstanding returns has fallen, from 10.7% of all returns in 2011 to just 5.9% in 2012. This equates to around 518,000 fewer penalty notices being issued.

In addition, HMRC has taken around 273,000 people out of the Self Assessment system.

People who receive a late-filing penalty can appeal against the decision if they have a reasonable excuse for not sending in their tax return, such as family illness or bereavement and, if they believe they no longer need to be registered for Self Assessment, they must let HMRC know.

Stephen Banyard, HMRC’s Director General for Personal Tax, said of the latest round of late filing penalties:

“We want the returns, not the penalties. This year, half a million more people have filed their return.”

“But, despite several reminders, nearly six per cent of people have not sent their 2010/11 tax returns to us and they’ll be getting a penalty.”

“Where someone has a reasonable excuse for not sending a return on time, we will waive the penalty. We also recognise that there will be some people within this group who don’t need to be in Self Assessment, and we will be happy to remove them from the Self Assessment system and cancel their penalty.”

Anyone concerned about late filing of tax returns can visit to check.

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