T51 - Heavy tax penalties on late tax return submission

Heavier penalties for late filing of tax returns could be on the way as the Revenue fails to meet its targets for self-assessment returns filed on time.

A report by the National Audit Office (NAO) revealed that more than £1 billion is owed in overdue income tax returns with young men, self-employed builders and people living in London the worst culprits.

More than a million forms were overdue last year, many from 'untraceable' taxpayers. At the moment, people that file their tax return after the 31 January deadline face a maximum £100 fine or the amount of tax owed, if less than £100. They must also pay interest and surcharges on the late tax.

It is reported that HM Customs and Revenue are considering measures which include fining late filers a percentage of the tax owed, increasing the automatic £100 fine, imposing a fine even if the taxpayer subsequently shows no tax is owed or basing the fine on the taxpayer's net income. It could also make greater use of the little-used £60 daily fines.