More than 90,000 workers have been given £100 fines for filing late self-assessment tax returns even though they owed no money, it has emerged.
Workers who earn less than £12,570 are not liable for income tax, but 95,000 of this group were hit with penalties for missing the deadline for providing a self-assessment tax return in the 2021-22 tax year.
Details emerged against the background of massive frustration around difficulties in contacting the HMRC with people trying to sort out their tax affairs facing long delays on its telephone lines and many just giving up.
His Majesty’s Revenue & Customs (HMRC) has confirmed that 155,000 late tax return penalties were initially issued to low income individuals. Subsequently 60,000 of these were cancelled.
In total, the tax authority raised £9.5m in penalties where there was no loss to the Treasury. Overall, 8 percent of individuals with income under £12,570 were issued with a £100 late filing penalty.
The figures are based on research by audit, tax and consulting firm RSM, whose spokesman Chris Etherington said people should not take the threat of a fine lying down.
“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,” he said.
“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.
Mr Etherington said: “It remains to be seen whether the proposed changes to the penalty rules go far enough to reduce this.”
An 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.”
