HMRC sends out tax penalties

THE TAXMAN has begun to send 850,000 penalties to taxpayers who submitted their self-assessment tax returns late - 550,000 fewer than the same time last year.

Although the deadline for receiving online returns was 31 January, this year HM Revenue and Customs (HMRC) is not issuing penalties to people who sent their 2010/11 return online on 1 or 2 February, following strike action at HMRC's call centres on 31 January.

This year, for the first time, taxpayers who have received a penalty but believe they shouldn't have to fill in a self-assessment return can ask HMRC to cancel the penalty.

People who get a late-filing penalty can also appeal against it if they think they have a reasonable excuse for not sending back their tax return in time, or they think a penalty should not have been issued for any other reason. Appeals should be made in writing by 31 March.

Examples of a reasonable excuse could include a family illness or bereavement, or a delay in HMRC sending out an online activation code needed to file a tax return electronically.

Under a new penalty system people will be fined £100 for submitting a late return, even if there is no tax to pay, or if the tax due is paid on time. After three months, there are additional daily penalties of £10 per day, up to a maximum of £900.