Hate to say I told you so…

told-you-so-hourglass-300x180Hate to say I told you so….

In September of last year I commented on the large increases in the HMRC penalties for failing to submit a personal Self Assessment tax return on time and predicted people being hit badly by what seemed an overly harsh regime.  In brief, the ‘old’ rules allowed for fines which rarely exceeded £200 and could never exceed the amount of tax due on a late return whereas the new regime could impose a £1,600 penalty even if there was a refund due.

Figures just released by HMRC suggest my fears were justified.  The number of tax returns actually submitted late went down from 1.56 million for 2009/10 to 1.16 million for 2010/11.  However, estimates suggest that the amount of fines levied has rocketed from £250m for 2009/10 to a whopping £958m for 2010/11.  Almost a billion pounds and it’s possible this figure will increase as the estimates do not include further penalties that will be due if a tax return is still outstanding after a year.

As yet, no ‘hard case’ stories have filtered through to the media but I suspect that this is partly due to HMRC not yet enforcing these debts and partly because there will be some less financially-savvy people still out there racking up penalties without really knowing what’s going on.

All is not lost, as if you have a ‘reasonable excuse’ for late filing, the penalties can be lifted.  Having said that, HMRC are notoriously reluctant to accept that what might seem a ‘reasonable excuse’  to most people is one that they should accept.

I’d suggest we ‘watch this space’ for a flood of appeals and for one or more media outlets to pick up cases of OAPs being hounded by the tax collector.

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