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HMRC Penalties ‘nothing short of oppressive’

15th May 2015

HMRC have been attacked for their self-assessment penalty regime, with the Low Incomes Tax Reform Group (LITRG) claiming that it is ‘nothing short of oppressive’.

Despite the increased advertising and awareness strategies put in place by HMRC, for the year ending 5 April 2014 over 890,000 taxpayers failed to submit their returns on time (between 6 April 2014 and 31 January 2015). 200,000 of these were due to people not pressing the submit button when doing so online.

Currently, a flat amount of £100 is automatically levied against people filing their tax returns late (after 31 October for paper returns, or 31 January for online returns). Further penalties are applied if the return still remains late after three, six and twelve months. Prior to 2012, these penalties were cancelled if no tax was in fact due to HMRC.

HMRC, recognising that this does not differentiate between people who are one day late, and persistently several months late, have announced a consultation to look at reforming the penalty system – current suggestions seem to favour a system akin to the points based one used in motoring.