HMRC: act now to avoid late tax fines
HMRC is offering people the chance to cut fines for late tax returns, but if you want to take part you need to act quickly.
Letters from the taxman rarely include good news, but the latest batch, which have gone out to 7,000 people who owe tax from the financial year 2009/10, offer a chance to cut down any fines due.
Those taxpayers who have failed to submit self-assessment tax returns and now owe money to HM Revenue & Customs have the chance to cut the figure they may be fined for the late return. But to do so, forms need to be returned and tax paid by the 2nd October.
This is all part of a new HMRC campaign called ‘The Tax Return Initiative’ which was launched back in July to encourage people to come forward if they owe money.
The Tax Return Initiative
Although the new campaign is largely aimed at higher-rate taxpayers, it is open to anyone and relates to the tax years up to and including 2009/10.
If you come forward and submit missing forms before the deadline next month you’ll be liable to pay between 10-20% of the tax due as a late penalty. Normally the fine can be up to 100% of the outstanding amount.
The quickest way is to do this online but you will need to register first for HMRC Online Services which can take a few days. You can register on the website or by calling 0845 601 8818.
What happens if you don’t pay?
If you’ve not paid, you’ll already be facing a significant fine. This campaign gives you the chance to get your taxes up to date and return any money owed, while paying a much smaller fine.
For those people who still don’t return any unpaid tax, HMRC says it will conduct its own investigations and the penalties will be a lot harsher if it finds you have ignored this warning. This could lead to paying up to 100% of the tax due in fines or a criminal investigation.
It says it’s completed 18,000 investigations, and 23 criminal cases are under way, so if you’re burying your head in the sand about tax that’s due it would be a lot better to come forward now.
HMRC fee system
The latest initiative doesn’t apply to people who have forgotten to fill out and return a self-assessment form for the year 2010/11. These people will have been contacted back in February and March as the forms were meant to be sent in January.
If you’re in this boat, you could now be facing fines of up to £1,200 for late returns, as HMRC’s new fine system came into place in April.
In the first instance people with late returns were given automatic £100 fines. Then it’s £10 a day fine for three months which is capped at £900 plus 5% of the tax due (a minimum of £300).
After six months, a further penalty of 5% of the tax due or £300 (whichever is greater) is added. And after 12 months, another 5% or £300 charge. In serious cases, the penalty after 12 months can be up to 100% of the tax due.
How to appeal against HMRC fines
It is possible to appeal if you’ve got a reasonable excuse such as family illness or death or if you received a late filing penalty but don't think you should ever have been in the self-assessment system in the first place. If HMRC agrees the fine will be cancelled.
The appeal needs to be in writing and it needs to be sent within 30 days of when you received either a penalty notice or a decision on the tax you owe from HMRC.
Within the letter you need to include details on why you’re appealing, such as if you think your tax return was sent on time, if you have a reasonable excuse for missing it or if there’s been a mistake. HMRC will then get in contact, by post, and tell you its decision.
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Thanks LastChip and Damson Solutions - I may give the ombudsman a go. I think it drives me doubly crazy because I work in both IT and support and can see a hundred ways they could be doing it more effectively and efficiently. Every letter has a different set of contact details on it and they always suggest calling which, when I can get through, is what I suspect led to this ridiculous situation in the first place (called to set up my UTR 4 years ago, UTR wasn't processed, made second call, first UTR somehow processed with the second UTR). It's just such a daft way to operate.
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Dear blindmissellie, send a formal written complaint and if you don't get anywhere, look up http://www.ombudsman.org.uk/improving-public-service/reports-and-consultations/reports/parliamentary/small-mistakes,-big-consequences/7 and repeat your complaint to the ombudsman. As you will see from this website, it is possible to get it sorted - just be prepared for the speed of an arthritic snail!! good luck
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Interesting article and comment. The first thing that springs to mind, is blindmissellie is dealing with a bunch of morons. However, given that the educational requirements to be employed by the tax office are quite reasonable, that doesn't really ring true. So one has to look for other reasons why such a simple and reasonable request cannot be initiated. The first thing to note is, no one I've ever come across in the tax office remotely fully understands the tax system. In fact, most tax specialists don't fully understand the system either, but know enough to "get by". So one can conclude from that, the system is far, far too complicated. It may not only be complicated in a pure tax sense, but also complicated in the user interface as well, So does the problem lay there? Second maybe, the system, as a security aspect, doesn't allow anyone to delete a UTR. What fun that's going to cause! But the bottom line is, anyone who has the right knowledge and administrator access to the database can. So there's really no excuse why procedures cannot be put in place to verify the problem and then action a resolution. What also struck me about the article itself, is apparently, they investigated 18,000 cases and have only 23 criminal charge cases in progress. Perhaps many of those cases settled prior to the final stage becoming necessary, but at first look, it doesn't bode well for their hit rate. That's an awful lot of resources for very little return. Furthermore, it seems the working population of the UK is about 33m. Turning the discussion on it's head, if only 18,000 are being investigated and I was an habitual tax dodger, I'd consider the odds very much in my favour. Yet another reason to consider the tax system in the UK pretty much completely unusable, unfriendly and broken. It's human nature, if you make something so complex that no one understands it, they'll ignore it and in my view, that's exactly what's happening. We've heard all sorts of noises from the government about simplifying the tax system. And that's all we've heard - noise!
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19 September 2012