And just as things may have toughened out there, so have the punishments. Penalties for late filing have jumped 56% in five years. The amount payable has also changed from a fixed £100 penalty to a maximum of £1,500, depending on the amount of tax owed.
Law firm McGrigors warned that many taxpayers are being unfairly charged, with a ‘draconian’ HMRC ‘churning out fines all too indiscriminately’. While the company reckons the majority don’t bother to appeal bcause they ‘assume that HMRC issues fines strictly in accordance with the law’ it insists it can be worth questioning the figures - especially as the fines are about to get more severe.
The smallest fine that can be received is still £100, for filing a day late. You will then be charged £10 for every which you fail to file, even if you have no tax to pay, as well as the £100 fixed penalty, to a 90-day maximum of £900. If you file six months late you will pay £300 or 5% of the tax due as a penalty, whichever is the higher, as well as the earlier penalties mentioned above.
In other words, it’s a potentially huge chunk of change, which shouldn’t come as a surprise given the Treasury is as desperate for cash as everyone else right now. It’s certainly a handy way of getting money for old rope – old rope with which many taxpayers are hanging themselves. Yet the HMRC denies it’s simply using the more ‘draconian’ approach to generate extra cash for itself: ‘We want tax returns back not penalties, so nobody will receive a penalty where they file a tax return by the deadline or have a reasonable excuse for failing to do so,’ said an HMRC spokesman.
Whatever the motives, the next tax deadline is the amazingly early October 31, by which date anyone filing their tax return on paper should be scrambling to meet. Clearly they want everyone to go online… Don’t say you haven’t been warned…