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John Nuth Accountants is based in Wiltshire, between Salisbury and Warminster that offers professional accounting advice for small and medium businesses.

HMRC plan to scrap £100 fines for late tax returns

John Nuth - Monday, June 01, 2015

The Government's £100 fine for late tax returns could be scrapped for hundreds of thousands of people who return the forms “a day or two” late, under radical government plans.

HM Revenue & Customs has admitted that its penalties regime may be too rigid, and is drawing up proposals to end fines for taxpayers who miss the deadline “by a day or two”.  New rules outlined for public consultation could see people who owe the government tax charged higher interest rates on their debts to encourage them to pay sooner, instead of being hit with automatic fines.

The proposal follows figures showing that 890,000 people missed the January 31 deadline for completing their income tax self-assessments and they now face an escalating scale of penalties, starting with an automatic £100 fine.

Many face fines simply for filing their self-assessment tax returns late, even if they do not owe the government any tax, HMRC said. Penalties for VAT breaches and failures to pay the right excise duty could also be in line for reform under the plans.

HMRC admitted that the vast majority of customers meet their obligations in full and on time, and that penalties are only applied to a small minority of people and businesses, and perhaps it should differentiate between deliberate and persistent non-compliers and those who might make an occasional error.

There is a suggestion of reforming the rules along similar lines to driving penalties, in which individuals are not fined at first but given harsher penalties if they repeatedly break the rules.