Taxpayers hit by huge fines for late self-assessment forms

Taxpayers are set to gift the taxman an unnecessary £479 million this year in fines generated by late returns, miscalculations and surcharges on unpaid tax, according to research by Unbiased.co.uk, the online Find an IFA search. The research also reveals this amount has increased by £16 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 penalties for those who return their self-assessment forms late or incorrectly remain unforgiving, so now is the time to take tax action! Missing the HMRC's deadlines inevitably results in hefty fines, and in the current climate more than ever we would urge consumers to avoid this 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:

£102 million in fines for forms returned past the January 31st deadline
£315 million through fines for mis-calculations made on tax forms
£62 million in surcharges for unpaid tax from previous years.

In 2007, it was estimated that over 1 million 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 an increase of 16% on 2006, which shows that consumers are still failing to take action and reduce the amount of tax they pay.

Elms concluded, "You may already consult an accountant for tax advice, but to ensure you're managing your personal finances as tax efficiently as possible, an independent financial adviser may offer some invaluable help."

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