UK Late Filing Penalty Regime Kicks In

by Robert Lee, Tax-News.com, London

21 February 2012

850,000 UK taxpayers will feel the force of HM Revenue and Customs's (HMRC) new penalty regime in the coming weeks, as the first penalties are issued.

Those who failed to send their 2010/11 Self Assessment returns to HMRC on time will begin to receive letters containing a GBP100 (USD158) late-filing fine. HMRC is also warning those who have still not filed their return to do so now, or risk further penalties. 850,000 penalties for late tax returns will be issued over the next fortnight.

Due to industrial action at its contact centres, HMRC was forced to delay the introduction of the new penalty system. As a result, although the deadline for receiving online returns was January 31, HMRC will not issue penalties to those who sent their 2010/11 return online on February 1 or 2, 2012.

An initial GBP100 fixed penalty will be charged, regardless of whether the taxpayer has any tax to pay, or if the tax due is paid on time. After 3 months, additional daily penalties of GBP10 per day will be levied, up to a maximum of GBP900. After 6 months, there will be a further penalty of 5% of the tax due or GBP300, whichever is greater. After 12 months, the individual will face another 5% or GBP300 charge, whichever is greater. There are also additional new penalties for late payment of 5% of the tax unpaid at: 30 days; 6 months; and 12 months.

HMRC has said that an appeal can be made in writing by March 31 if a taxpayer believes they have a reasonable excuse for not sending back their tax return in time, or they think a penalty should not have been issued for any other reason.

HMRC’s Stephen Banyard said: “We want the returns, not the penalties. So anyone who still hasn’t sent theirs should do so as soon as possible. People who receive a penalty notice should act now to avoid further penalties. They should send in their return, appeal if they think they have a reasonable excuse, or contact us if they think they shouldn’t have been in Self Assessment.”

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