New penalty regime for late returns on the starting blocks

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As expected, new penalty arrangements for late returns and late payments of tax will be legislated for in Finance Bill 2009. The new penalties have been the subject of extensive consultation, and HMRC even undertook some independent research into taxpayer behaviour with regard to late filing.

The new system will abolish the capping process used in relation to late filing penalties for self assessment returns, but will retain the principle of reasonable excuse. The initial penalty for most late returns will be set at 100, with a modest daily penalty of 10 per day applying automatically once the return is three months late. Higher penalties, and tax geared penalties will follow if the return remains outstanding for longer than six months.

Concerns about those taxpayers with very low tax liabil...

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