Charity attacks HMRC over £100 late tax return fines

The Low Incomes Tax Reform Group has labelled HM Revenue and Customs’ (HMRC) automatic £100 fine for the late submission of self-assessment tax returns as “nothing short of oppressive”.

The charity, which represents taxpayers who cannot afford professional advisers, said that many people being fined missed the deadline due to unforeseen circumstances such as ill-health, bereavement and ignorance.

The group has called on HMRC to overhaul the controversial penalty system which currently fines almost one million taxpayers each year.

In addition, around 200,000 people last year missed the self-assessment deadline as they simply did not press the “submit” button when they filed online, according to a recent official consultation.

The consultation also found that the vast majority of taxpayers who complied with the deadlines experienced “a very significant amount of distress, fear and worry” due to the acceleration of penalties that could rise from £100 to up to £1,200 in a six-month period.

In February, HMRC revealed plans to ascertain “whether we could better differentiate between deliberate and persistent non-compliers and those who might make an occasional error for whom alternative interventions are more appropriate”.

The tax authority added there are “’reasonable excuse’ provisions that can remove penalties, but the rules may need updating to better support those genuinely wanting to comply”.

The £100 automatic penalty for late filing has been particularly criticised because since 2012 it’s been affecting people that may not even owe tax.

Around a quarter of people required to fill in self-assessment tax returns have no liability or owe less than £50 in total.

The Low Incomes Tax Reform Group concluded by citing the fact that charities such as TaxAid and Tax Help for Older People are seeking £250,000 in additional funding to handle the growing demand for their services – having turned away more than 6,000 taxpayers last year.

Date published 15 May 2015 | Last updated 15 May 2015