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4 months ago
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HM Revenue & Customs (HMRC) have fined tens of thousands of low earners for late self-assessments despite them not owing any tax.
Figures revealed that 95,000 people who earnt less than the minimum threshold for paying tax of £12,570 were hit with penalties for late self assessments in the 2021 to 2022 tax year.
HMRC also confirmed that 155,000 late tax return penalties were initially issued to low income individuals in the same year meaning that 60,000 late filing penalties were cancelled.
Overall, eight percent of individuals with income under £12,570 were issued with a £100 late filing penalty.
In total, HMRC's data indicates they raised £9.5m in penalties from those who can afford it the least and where there was no loss to the Treasury.
HMRC figures reveal 95,000 people who earnt less than the minimum threshold for paying tax of £12,570 were hit with penalties
Until 2011, the tax authority did not fine individuals for late self-assessment submissions if they paid any tax that was owed on time
Accountancy firm RSM, who obtained the figures via a freedom of information request, explained: 'It might well be the case that many individuals on low incomes are unfamiliar with the self-assessment rules and have perhaps incorrectly assumed that no tax return is required in circumstances when there is no tax liability.'
How to appeal against a Self Assessment penalty and get your money back
- If you've been charged a penalty for not sending a tax return but you do not need to send one, ask HMRC to cancel it.
You can either use the 'ask HMRC online' option on the general enquiries contact page on gov.uk and speak to a webchat advisor or complete a form online at gov.uk.
- If you're appealing a penalty for a late tax return or late payment, you can use form SA370 or appeal online at gov.uk.
You'll need: the date the penalty was issued, the date you filed your Self Assessment tax return and details of a reasonable excuse for late filing.
Until 2011, the tax authority did not fine individuals for late self-assessment submissions if they paid any tax that was owed on time.
However, that led to some people paying their tax but submitting their tax returns late so the rules were changed to try and penalise persistent offenders who paid their tax but did not submit their returns on time.
Plans are currently being drawn up to reform the system again towards a points-based one which would aim to penalise those who repeatedly submit their forms late and not those who do inadvertently.
RSM concluded: 'It remains to be seen whether the proposed changes to the penalty rules go far enough to reduce this.
'A relatively simple change to the legislation could make a significant difference to those hit by a fine that might feel disproportionately penal.'
Fines for filing a tax return late include an initial £100 fixed penalty - even if there is no tax to pay or if the tax due is paid on time.
After three months, there are additional daily penalties of £10 per day, up to a maximum of £900.
After six months, there is a further penalty of 5 percent of the tax due or £300, whichever is greater.
HM Revenue and Customs, which has its HQ (pictured) in Parliament Street in central London, says they 'strongly encourage anyone who does not need to file a return to tell us'
HMRC's data indicates they raised £9.5m in penalties from those who can afford it the least and where there was no loss to the Treasury
A HMRC spokesman told MailOnline: 'Deadlines for returns are necessary for the efficient functioning of the tax system, and we strongly encourage anyone who does not need to file a return to tell us.
'Our aim is to support all taxpayers, regardless of income, to get their tax right. Details of what to do if a person no longer needs to file a return are included in reminder letters every year.'
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