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Late filing penalties deliver £37m a year

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30th Jun 2005
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The Inland Revenue collected £37.4m in penalties for late filing of self assessment tax returns in the year to the end of October 2004.

Liberal Democrat Treasury spokesman Vincent Cable requested an estimate of late filing penalties collected for each of the last five years.

Paymaster general Dawn Primarolo said: "The amount raised in respect of penalties paid for failure to submit self assessment tax returns, by the due date, in each year since 2000 is shown [below]. The years relate to the former Inland Revenue accounting years that run to the end of October each year."

  • 2000 - £33.01m
  • 2001 - £36.20m
  • 2002 - £36.45m
  • 2003 - £37.78m
  • 2004 - £37.38m
  • The National Audit Office's report on the filing of self assessment returns, published last week, said about 25% of returns are filed within two weeks of the 31 January deadline, causing a major peak in workload and "higher risks of internal inaccuracies".

    The NAO said: "[HMRC] estimates it incorrectly imposed in 2004 late filing penalties on around 30,000 taxpayers (three per cent of all taxpayers with penalties imposed and 0.3 per cent of all taxpayers) who had filed by the deadline. Around 20,000 of these were due to mistakes in logging returns on the day of receipt."

    It added that HMRC "cannot identify individual taxpayers who have incorrectly received a penalty", although the penalty notice tells people what to do if they do not know why they have been sent the notice.

    Anne Redston, personal taxes sub-committee chairman at the Chartered Institute of Taxation, told the Telegraph earlier this week: "I don't think the Revenue can say how well the penalty system is working. Before they look at giving themselves more rights and powers, they should look at how they are using their existing rights and powers."

    The paper quoted an HMRC spokeswoman as saying: "We endeavour to make sure penalties are not incorrectly issued and have processes where we are cleaning data. Where people have wrongly paid and we come across it, we refund the money - we don't hesitate."

    The NAO report pointed out that taxpayers without agents may be "less well placed" to identify or respond to HMRC mistakes in issuing penalties.

    Andrew Goodall
    Editor, TaxZone

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