An estimated 11 million individuals are obligated to file a “self-assessment” income tax return if they have alternative sources of income or have done so in the past. However, the UK’s tax authority, HMRC, imposed fines on 92,000 individuals from the lowest income bracket for late tax return filings in 2020-21. Surprisingly, only 39,000 fines were imposed on the highest earners in the same year. Between 2018-19 and 2021-22, over 660,000 fines were issued to low-income taxpayers, with approximately 180,000 successful appeals.
Failure to file taxes before the deadline results in a penalty of £100. If the deadline is surpassed by three months, the daily fines can increase by £10 each day. After six months of delay, an additional £300 penalty is imposed, followed by another £300 if the return is not filed within 12 months of the deadline. Prior to 2011, the penalty was waived for individuals whose returns showed no tax owed.
Dan Neidle, tax campaigner and founder of Tax Policy Associates, advocates for a change in the law and HMRC’s practices. Neidle argues that individuals filing late should not be required to pay penalties that exceed their actual tax owed. The current penalties are causing people to fall into debt, as exemplified by a case where someone became homeless due to HMRC penalties.
HMRC has been facing criticism for its poor customer service and unacceptable delays in responding to taxpayers’ queries.
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