Taxpayers hit by huge fines for late self-assessment forms

Taxpayers are set to gift the taxman an unnecessary £463 million this year in fines generated by late returns, miscalculations and surcharges on unpaid tax, according to research by Unbiased.co.uk. The research also reveals the good news that this amount has dropped by £26 million on estimations for last year.

Failure to get forms to Her Majesty’s Revenue & Customs (HMRC) by the fast-approaching January 31st deadline will incur an initial £100 late payment charge, as well as a hefty additional £60 a day fine. If the return is still overdue in July, a supplementary penalty of £100 will be added additional to the daily charges. Furthermore, a penalty of up to £3,000 may be charged for each year in which inadequate records are kept.

David Elms, Chief Executive of Unbiased.co.uk, said, “The rules on self-assessment forms remain unforgiving towards those who return their forms late or incorrectly, so now is the time to take action! Missing the HMRC’s deadlines inevitably results in monetary penalties, so we would urge consumers to avoid these fines by ensuring that their forms arrive on time and in order. Remember that expert help is always at hand, in the shape of an IFA, to help you deal with your tax return.”

Unbiased.co.uk’s research calculates that money will be wasted in the following three ways:

£89 million in fines for forms returned past the January 31st deadline
£302 million through fines for mis-calculations made on tax forms
£72 million in surcharges for unpaid tax from previous years.

In 2006, it was estimated that 876,000 self-assessment forms were received after the January 31st deadline. Of these, the vast majority incurred a penalty of £100, and many more were subject to further surcharges. This represents a drop of 12% on 2005, which shows that consumers are making a good headway at taking TaxAction and reducing the amount of tax they pay.

Elms concluded, “For tax advice see an accountant, but to ensure all your financial information is in order and that you’re being as tax-efficient with your personal finances as possible, see an independent financial adviser.”

To help people take control of their finances Unbiased.co.uk offers an online guide to reducing tax waste as well as tips to reducing tax waste and an online tax wastage calculator. For online information and details of local IFAs, visit unbiased.co.uk/taketaxaction/