TAX: HMRC plan to remove £100 penalty for late filing
HMRC Tax return filing statistics – 2014
• 10.24 million tax returns were filed by midnight on 31 January 2015
• 4.3 million of these tax returns were filed in the month of January 2015
• Late filers! Between 1 and 2pm on 30 January was the peak submission time for the entire tax filing period
• 210,000 more people filed their tax return on time this year
• BUT: 890,000 failed to submit their tax return by the deadline
With more people filing self-assessment tax returns online than ever before, HMRC has decided their filing penalties could be a little rigid and are proposing a change to the system.
There was a sudden rise in those required to complete a self-assessment tax return when changes to Child Benefit came into force in 2013, affecting more than one million taxpayers, many of whom are not business owners or savvy to tax compliance.
How it worked before
Up until 2012, if there was no tax due when the tax return was eventually filed, the £100 penalty was revoked. However, since 2012, penalties became due for all those who missed the deadline.
How it works now
890,000 people failed to submit their tax return by the filing date of 31 January this year, so each will be issued with a mandatory £100 penalty, unless they can give a (very) valid reason for their delay.
How it will work in the future
HMRC are now proposing to waive penalties where deadlines are missed by “a day or two”, with the aim to distinguish between those who are making an effort with the set deadlines compared to those who are simply non-compliant.
Instead of focusing on penalties, they are considering increasing the level of interest due on tax debt to encourage payment sooner.
Those who persistently fail to comply will still be subject to fines but for the majority of taxpayers there looks to be some leniency coming on meeting the filing deadline.
Figurit filed 100% of our clients 2013/2014 tax returns before Christmas Day 2014!
This is a statistic we are proud of as we work continually with our clients throughout the year to ensure they meet deadlines and are not faced with penalties. We also work with them to estimate tax upfront so that tax savings can be made in advance.
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– Could you be forced to pay disputed tax up-front?
– How to pay your self-assessment tax bill
– CALENDAR: Don’t forget the 31st January 2015