Late tax return could result in £1,300 penalty

Posted on April 3rd, 2011 | Categories - News

Tax return penalties are set to rise from 6 April.

Overdue tax returns will lead to larger fines.

The penalty for filing a late tax return will rise from £100 to a potential maximum figure of £1,300, HM Revenue & Customs has revealed.

The UK tax agency said the current penalty is failing to act a deterrent adding that the new fines system will apply from the next tax year – rather than chasing late payments it wants to spend more time “catching criminals and collecting tax”.

Under the present system the maximum penalty for a late tax return stands at £100 with interest added up until the date payment is made.

The new system will mean that the initial £100 fine will be charged on the first day the tax return is overdue. From that point onwards a further £10 will be added per day for the next three months. More interest will be incurred until the six month and one year mark with the maximum penalty hitting £1,300.

HMRC’s Stephen Banyard said: “The vast majority of people don’t have to pay penalties because they send in their return and pay on time. But there are always a small number of people who have avoided filing or paying on time”.

He continued: “HMRC spends a lot of time pursuing late returns and getting involved in unnecessary appeals work. We want to focus our resources on more productive work such as catching criminals and collecting tax. The old £100 penalty was not much of a deterrent and these new penalties, which increase over time, will get people to submit returns as soon as possible. Basically the greater the delay, the greater the penalty”.