HMRC Launches Consultation Over Tax Fines and Penalties

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August 7th 2022
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HMRC Launches Consultation Over Tax Fines and Penalties

With the emphasis on providing digital services, the taxman is looking to modernise the way fines and penalties are issued.

The recent tax return deadline provided one astounding statistic, the fact that 890,000 late filers of the self assessment would be automatically fined £100.

This is the day one penalty and is applied regardless of whether any tax is due. Although the amount will haul in £89 million for the revenue, HMRC are looking to overhaul the penalty system to be fairer and comply with the duty to encourage taxpayers to meet their obligations. The 'powers review' of HMRC advised that penalties should influence behaviour effectively and be proportionate and fair.

Applied to the Self Assessment Tax Return deadlines, the above principles would possibly be more lenient on people who miss the deadline by a day or two - or where no tax was actually due.

The new strategy put forward is based upon the three principles of Promote, Prevent and Respond. The three come together to make sure the opportunity for mistakes is removed by providing simpler systems and processes. Personalised reminders and improved validation are methods to prevent mistakes at the time of filing.

The consultation process has just started on fines and penalties and as it is a five stage process, would probably be some time before it is implemented. People are able to provide their ideas by 11 May 2015 to help shape HMRC's plans.

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