No £100 fine for late tax returns, says HMRC

People who have filed late tax returns have been let off paying a £100 fine for missing the deadline, HM Revenue and Customs has confirmed.

But the penalty has only been waived for individuals who provide a “reasonable” excuse for being late.

The development was disclosed to the Daily Telegraph, via a leaked memo, and could affect up to 890,000 people.

A spokesman for HMRC said it wanted to focus more resources “on investigating major tax avoidance and evasion”.

The Telegraph report says the internal memo asks tax officials to remit fines without further investigation for those people who could show mitigating circumstances, and who appealed against the fine after their tax return was sent in.

‘Fair and proportionate’

HMRC is facing a backlog of almost a million letters and staff have been taken off call centre duties to work through the mail, according to the paper.
The deadline for self-assessment returns was midnight on 31 January.

The Telegraph quotes the memo as saying: “Our penalty regime is intended to influence customer behaviour, but also be clear and cost-effective, fair and proportionate.

“The current way of managing penalties does not meet these objectives, and so we have decided to take a more proportionate approach where a customer has filed their return late, and then appealed against their penalty…

“This means that in the vast majority of cases we will be accepting the customer’s grounds for appeal, and we can cancel the penalty.”

On its website HMRC lists excuses it regards as acceptable for late payment. These include the death of a family member, a stay in hospital, a computer failure, fire, or postal delays.

Paul Lewis, the presenter of BBC Radio 4’s Money Box programme, said the list was “quite broad” and included reasons officials originally said they were unlikely to accept.

“This isn’t an amnesty. If you filed late and you’ve got a penalty and you haven’t appealed then you will have to pay. But if you appealed, and by now have filled the form in, then the chances are, the overwhelming majority… will be accepted.”

He said the move coincided with a fall in the number of staff at HMRC. But the Money Box presenter added the HMRC does appear to have been successful in its aim of increasing overall receipts by concentrating efforts on “serious tax avoiders”.

The former chair of the Public Accounts Committee, Labour MP Margaret Hodge, suggested the rules had been brought into “disrepute”.

She told the BBC: “Most people will get tax returns in on time, so if HMRC says it is not going to pursue people who file late, it undermines the system.

“It won’t be seen to be fair. People can now simply look down the list of excuses and pick one.”

‘Good reason’

A HMRC spokesman said it had “always accepted” those with a reasonable excuse should have a penalty waived, and it was now “expediting that process”.

A statement added: “We’ve been clear we want to focus more and more of our resources on investigating major tax avoidance and evasion rather than penalising ordinary people who are trying to do the right thing.

“But no one will be let off the fine unless they’ve now sent in their return and have a good reason for sending it in late.

“This is part of our planned approach to penalty appeals, particularly for small businesses and individuals who have sent their tax return in late.”