Penalties on way for late tax returns

Almost one million taxpayers will receive a penalty for filing their tax return late, but the figure has fallen substantially on last year.

HM Revenue & Customs (HMRC) announced on 20 February that it would be issuing 850,000 penalties for late returns over the next fortnight, 550,000 fewer than the same time last year.

People who failed to submit their 2010-2011 self assessment return by the deadline will receive an automatic £100 late filing penalty. Although the deadline for receiving online returns was 31 January, this year HMRC is not issuing penalties to people who sent their returns online on 1 or 2 February, following strike action at HMRC’s call centres on 31 January.

Anyone who continues to delay sending in their tax return will face further penalties. For example, someone whose return is more than three months late will be charged an additional £10 penalty for each day it remains outstanding, up to a maximum of 90 days.

If the return is six months late, a further penalty of £300 or five per cent of the tax due, whichever is the higher, will be levied. If it is 12 months late, another penalty, again the higher sum of £300 or five per cent of the tax due, will be imposed.

People who receive a late filing penalty notice can appeal if they think they have a reasonable excuse – such as a family illness or bereavement for a delay in HMRC sending out an online activation code –  for not submitting their tax return in time, or they think a penalty should not have been issued for any other reason. Appeals should be made in writing by 31 March.

HMRC has also confirmed that anyone who receives a penalty, but who believes they don’t need to be in self assessment should make contact and if HMRC agrees, the return and the penalty will be cancelled. Full details are contained in a leaflet that will accompany the penalty notice.

LINK: Information on tax return deadlines and penalties 

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