Almost one million taxpayers missed the self-assessment tax return deadline of January 31 and have been fined.
Data released by HMRC shows 958,296 taxpayers missed the deadline, equating to just over 8 per cent of the total number of returns.
Taxpayers who miss the deadline are fined £100 at first and then £10 a day after three months and the greater of 5 per cent of the tax owed or £300 after six months of not filing the return.
A statement from HMRC said: “Customers who have missed the deadline should contact HMRC. The department will treat those with genuine excuses leniently, as it focuses penalties on those who persistently fail to complete their tax returns and deliberate tax evaders. The excuse must be genuine and HMRC may ask for evidence.”
Dawn Register, a partner in tax dispute resolution at BDO, said: “One way to avoid the current penalty is to give HMRC what is deemed a ‘reasonable excuse’. However, the definition of a reasonable excuse is subjective and is being more frequently tested in many cases that reach tribunal.
“In addition, if you are experiencing cash flow difficulties you or your adviser can contact HMRC to formally defer payment, commonly known as a 'Time To Pay agreement'.
"HMRC published updated guidance on 20th January 2020 in which HMRC says it will provide 'extra, bespoke support to people facing financial hardship or in personal difficulty'.
"This appears to be a softening of language and approach, probably in response to recent criticisms under the loan charge debacle.”
Jackie Hall, tax partner at RSM, cautioned that individuals who leave their tax return to the last minute risk missing out on tax allowances, or filing an incorrect tax return which could lead to a fine later.
She said: “In your haste to submit the return before the deadline you do run the risk of not taking enough care to make sure all income and gains are correctly included.
"Omitting income or gains from your return can lead to HMRC enquiring into your return which will inevitably lead to more cost, interest and possibly penalties.
"You can repair the return after the deadline although this isn’t ideal. If a repair of the 2018/19 return is required it must be submitted by 31 January 2021."
FTAdviser’s Tax Efficient Investing event returns this month ahead of what could prove a pivotal year for tax planning. The OTS has proposed a series of changes to the current regime, changes to property taxes are already on the way, and pensions taxation is back on the agenda. Register here: ftadviser.com/taxmasterclass
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