Could you face £1,600 taxman fine?

Updated: 

tax formPA/PA Archive/Press Association Images

Things aren't looking good for the self-assessment laggards. According to an investigation by the Daily Telegraph, up to three million of them could end up with a fine for late filing this January.

And thanks to the new rules, they don't have a 'get out of jail free' card.

Outstanding

The paper discovered that at the moment there are still three million tax returns outstanding. To put that into perspective, it has had 4.5 million online returns and 1.8 million paper retuns. So that's a serious proportion leaving it to the last minute.

This is nothing new. Every year millions of people leave things to the last possible second. Most of them are far too busy working for themselves to get on top of their paperwork. So the mad last-minute scramble is an annual ritual.


New rules

However, in the past there was always a quick-fix solution. People could pay any tax that they thought was owing, and file the return in full later. As long as there was no money outstanding at the deadline, they wouldn't face a fine. Now, however, the new rules have put a stop to this. Even if you have paid everything in full, you will still face a fine if you don't get the form in (and do it properly) by 31 January.

New fines

Many of these three million are expected to get themselves sorted in the next couple of weeks, but around 10% of all of those who fill in a return will fall short. And here they are in for a nasty shock too. Not only will they pay the £100 fine if they are even a minute late. If they miss the deadline by too much, they'll end up with higher and higher penalties.

If you don't file for three months, you will have to pay £10 a day in fines until you eventually file. The fees only stop mounting when you reach £900 - which is an astonishing figure to owe in fines. After six months the taxman can heap on another £300 penalty, and after a year he can add another £300.

You're not seeing things, It's true. If you're a year late you could end up owing HMRC £1,600 in fines alone.

The solution

The answer is, of course, to knuckle down and get your tax return done. Even if your tax affairs are particularly complex, there's no reasons not to get things in order by the end of the month.

Of course, there's the matter of having the funds to pay the bill, but if you fall short here, you need to be taking serious action before the end of the three months, when the really punishing fines kick in.

Of course, all this assumes that HMRC will stick with its side of the bargain, which as Adrian pointed out yesterday is far from a safe assumption.

So what do you think? Is this fair? Or are all of these fines established to punish people who are already struggling? Let us know in the comments.

SPONSORED FINANCIAL CONTENT