£1,000 penalty looms for late accounts

Taxpayers could end up paying £1,000 if they fail to file self-assessment
returns on time, a leading adviser has suggested.

Francesca Lagerberg, head of the tax faculty at the ICAEW, said: ‘The late
filing penalty is £100. Although we do not want to pay that kind of fine it’s
actually not that much money.’

Lagerberg indicated that HM Revenue & Customs recognises the penalty is
not enough of a deterrent, and that it would probably seek to raise it. ‘I would
put money on the penalty going up,’ she said, suggesting it would move to either
£500 or even to £1,000.

Lagerberg was speaking at the first Accountancy Age conference, held
at the Queen Elizabeth II conference centre in Westminster.

Lagerberg delivered a speech on challenges faced by tax advisers, and sat on
a panel that included Phil Shohet and Andrew Jenner of the KATO consultancy and
John Davies of ACCA.

HMRC has already accepted plans, proposed by Lord Carter of Coles, to bring
back the filing deadlines. The department is facing opposition from several
quarters over the move, including the specialist tax magazine

Lagerberg added her voice to those calls, saying: ‘My clients struggle with
the end of January and I don’t see them managing with September. It’s a big

Carter’s report, released with the Budget, suggested a move to September
filing for paper returns and November for filing online.

Lagerberg said that any move to raise the penalty would be tied to HMRC’s
review of powers, rather than to the filing changes.

Any move to raise the penalty at the same time as bringing back the deadline
would almost certainly be seen as an unnecessary double whammy. It is not known
precisely how much money HMRC receives from late filing penalties, but around
one million people miss the deadline each year.

Any move to increase penalties would also be regarded as somewhat punitive.
Before the advent of self-assessment, HMRC would assess tax liabilities. A
punitive charge would indicate that the transfer of a significant burden to
taxpayers was complete.

A spokesman for HMRC said: ‘This is pure speculation. We have no plans to
change the late filing charge.’

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