HMRC plans to scrap £100 late tax return penalty
12 Feb 2015
HM Revenue & Customs (HMRC) is planning to scrap the initial £100 penalty for taxpayers who fail to file their self assessment tax return on time.
Under the current system, individuals who miss the 31 January deadline face an automatic £100 fine. This is followed by a series of escalating penalties for continued failure to complete the return after three, six and 12 months.
This year, up to 890,000 taxpayers missed the deadline and will face the automatic fine.
However, HMRC has now announced plans to scrap the initial fine for those taxpayers who miss the deadline by only one or two days, arguing that it may be ‘better to differentiate between deliberate and persistent non-compliers and those who might make an occasional error for whom alternative interventions are more appropriate’.
Proposals for a new approach include charging higher interest rates on tax debts, and introducing a system of penalty points for persistent non-compliance.
A public consultation on the changes will run until May.