Over three million still to submit tax returns

More than three million taxpayers are yet to send in their 2018-19 tax returns and have just one week left to the 31 January deadline, HMRC warns

In the last week roughly two million tax returns have been submitted, which means overall 8.5 million taxpayers have avoided penalties by already filing their self assessment.

With only a week to go until the deadline, taxpayers are being urged to get their self assessment tax returns in on time, as HMRC is taking an increasingly hard line on appealing penalties for late filing, with some £5bn at stake in the past six years.

According to data from HMRC, attained by an freedom of information request made by Saffery Champness, since 2012-13 HMRC has issued penalties totalling more than £5bn.

Around 31% (£1.5bn) of these have been cancelled, suggesting an approximate yield for HMRC from late return penalties of almost £3.5bn.

HMRC issued more than 14,000 penalties in the period, with around 5,000 being cancelled.

In the financial year 2017-18, 490,000 individuals filed their tax returns late, and HMRC issued 1.7m late penalties, valued at £47.7m in penalties.

Saffery Champness analysis shows that while the size of penalties issued to individuals who file their self-assessment tax return late has remained relatively consistent over the past six years, the average value of a penalty cancelled decreased by 33.6% between 2012-13 and 2017-18 (though more fines applicable to 2017-18 may still be issued).

The average value of cancelled penalties in 2016-17 decreased by 9% compared to 2012-13. The firm says this may suggest that HMRC is increasingly unlikely to cancel comparatively larger fines.

The data also shows the number of tax returns filed late by individuals in the UK has decreased by 19.4% since 2012-13, and the number of penalties raised for late tax returns has fallen by 39.7% since 2012-13.

Over the same period, the number of penalties cancelled, as a percentage of penalties raised, has decreased by 16.6%.

Zena Hanks, partner in the private wealth team at Saffery Champness, said: ‘Additionally, HMRC’s data shows that a significant proportion of penalties each year were levied on historic tax returns.

‘This demonstrates that the appeals process is no quick-fix solution, and the procedure can embroil the taxpayer for years, with an uncertain outcome hanging over their head.

‘Although we cannot say for certain, we can assume that a significant proportion of the 345,000 penalties cancelled for late returns in 2017-18 so far were for historic returns – returns which were filed over a year ago.’

Hanks says the clock is ticking for the millions of taxpayers who still have not filed their self-assessment tax returns with HMRC.

‘If an individual fails to file their return by 31 January, as was the case for millions of taxpayers over the past decade, they will be subject to HMRC’s late fines, which depending on the length of the delay, can tally into the thousands of pounds.

‘The initial penalty will be levied if your tax return is filed a minute past the 23:59 deadline – even if you do not owe any tax,’ she said.

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