HMRC fines 95,000 people despite them not owing any tax
HRMC
HM Revenue & Customs (HMRC) fined almost 100,000 workers for late self-assessments despite them not owing any tax, figures reveal.
Workers who earn less than £12,570 are not liable for income tax, but 95,000 were hit with penalties for late self assessments in the 2021 to 2022 tax year, according to a Freedom of Information request by accountancy firm RSM.
HMRC has also confirmed that 155,000 late tax return penalties were initially issued to low income individuals in the same year meaning that 60,000 late filing penalties were cancelled.
In total, the tax authority raised £9.5m in penalties where there was no loss to the Treasury. Overall, 8pc of individuals with income under £12,570 were issued with a £100 late filing penalty.
Chris Etherington at RSM said workers can appeal any unfair charges.
He said: “There are various reasons why a £100 late filing penalty might be cancelled and taxpayers can appeal to HMRC within 30 days of being issued with a penalty notice.
“HMRC will accept a reasonable excuse but ignorance of a requirement to submit a return is unlikely to be successful.”
Before 2011, HMRC did not fine individuals for late self-assessment submissions if they paid the tax owed on time.
However, that resulted in late submissions so the penalties were introduced to target persistent offenders who paid their tax but did not submit their returns on time.
There are plans to reform the system to a points-based one, aiming to penalise those who repeatedly submit their forms late and not those who do inadvertently.
Etherington added: “It remains to be seen whether the proposed changes to the penalty rules go far enough to reduce this.”
HMRC has come under fire recently for its customer service and treatment of taxpayers. Complaints to the tax office soared by two-thirds last year as customer service hit an all-time low.
The number of taxpayers complaining about long waiting times rose 65pc to nearly 34,000 in 2022-23, up from 20,501 people in the previous year.
A HMRC spokesman said: “Deadlines for returns are necessary for the efficient functioning of the tax system, and we strongly encourage anyone who does not need to file a return to tell us.
“Our aim is to support all taxpayers, regardless of income, to get their tax right. Details of what to do if a person no longer needs to file a return are included in reminder letters every year.”
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