HMRC sends out tax return penalties

Tax return formAround half a million people who have failed to submit self-assessment tax returns are being sent penalty notices of at least £1,200.

HM Revenue and Customs (HMRC) said the additional penalty letters are being issued to people who have not sent in their 2010/11 tax returns.
Changes were introduced in April last year to boost incentives to file them and cut the cost of chasing up missing forms, meaning anyone who ignores their self-assessment filing obligations will be liable to higher penalties than in previous years.

The number of outstanding returns has almost halved in 2012, down to 5.9%, compared with 10.7% in 2011, HMRC said. This means 518,000 fewer penalties are being issued. HMRC has also taken 273,000 people out of self-assessment this year.

The penalties being issued include a maximum £900 penalty for non-filing alongside a further late-filing penalty of £300 or 5% of the tax due, whichever is higher.

HMRC's director general for personal tax Stephen Banyard said: "We want the returns, not the penalties.

"This year, half a million more people have filed their return - which means we are issuing 44% fewer penalties. But, despite several reminders, nearly 6% of people have not sent their 2010/11 tax returns to us and they'll be getting a penalty.

"Where someone has a reasonable excuse for not sending a return on time, we will waive the penalty. We also recognise that there will be some people within this group who don't need to be in self-assessment, and we will be happy to remove them from the self-assessment system and cancel their penalty."

The extra charges over the next few weeks are in addition to £100 late filing penalties for missing the January 31 filing deadline, which were sent out in late February and early March.

People can appeal against the charge if they believe they have a reasonable excuse for not sending their tax return, such as a family illness or bereavement.

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HMRC sends out tax return penalties

Most recently HM Revenue & Customs let Vodafone off the hook - for quite a sum. Vodafone paid out just £1.25 billion despite an original tax bill being closer to £8 billion (HMRC has always refused to reveal how much it thought the Vodafone final bill was). The episode was made even more shaming and painful because Vodafone was given several years to come good with the cash owed - even though it was sitting on a substantial cash pile at the time.

The Exchequer is estimated to have lost around £10 million to Goldman Sachs recently through an 'error' made by HMRC. The episode relates to an employee benefit trust run by Goldman allowing employees to take non-repayable loans that had no National Insurance contributions tied to them. HMRC did claw back the full amount from more than 20 businesses - but not Goldman. HMRC remains cagey about the details of the deal. Little HMRC accountability or transparency.

Huge problems with QinetiQ, the former Defence Evaluation and Research Agency, or DERA. A lack of clarity on contractual arrangements at the outset didn't help, allowing private equity company Carlyle to hammer the price down (why would you start negotiations when you didn't know the company's true value?). The Ministry of Defence behaved, it was said, like "an innocent at a table of card-sharps". Estimated cost to the taxpayer - £90 million. Huge sums were later made by QinetiQ management when the company listed.

The TaxPayers' Alliances estimates £2.7bn worth of taxpayer cash was wasted with a super-expensive 'National Programme for IT in the NHS'. The Department of Health, in the end, had very little to show for it as a consequence. Another example of poor management and a seemingly ingrained inability to provide taxpayers' with value for money.

"BT is paid £9 million to implement systems at each NHS site, even though the same systems have been purchased for under £2 million by NHS organisations outside the Programme", the Commons Public Accounts Committee noted.

Contentious. The Office for National Statistics estimated this has declined 3.4% since 1997, "with inputs increasing by 38%." The Centre for Economics and Business Research estimate that this inefficiency costs the taxpayer £58.4 billion a year.

Given the above record, are there any deals that the taxpayer has actually won out on? Not many, but the one successful project was the roll out of new Jobcentre Plus offices. It came in £314 million under budget, claims the Taxpayers' Alliance. A small cheer.


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