Thursday, 3 May 2012


Her Majesty's Revenue & Customs is fining 650,000 people £10 a day. The new daily penalties began this month for anyone who has to complete a 2010/11 tax return but hasn't yet filed it. The fines go on for up to 90 days - a possible £900 - and are on top of the automatic £100 penalty for anyone who filed their return online after 3 February.
It is a nice little earner for HMRC bringing in £6.5 million a day from 1 May to potentially 29 July.
But HMRC has admitted that 12,000 of those who have been told they are clocking up the penalties should never have been sent the letter. And I believe there may be many more who can get the penalties quashed.
In March the Revenue wrote to all 10 million in self-assessment to remind them to file next year's return. With the letter was a leaflet printed in big red type saying that some people could be taken out of self-assessment altogether. It listed eight questions - such as are you self-employed, is your income above £100,000, do you rent out property? If you could answer 'no' to all eight you were invited to call the self-assessment helpline and see if you could be taken out of self-assessment and have all fines cancelled.
Altogether 130,000 successfully took that opportunity. But the Revenue rather spoiled things by writing to 12,000 of them by mistake and saying they were liable to the £10 a day fine. It has now apologised and is writing back telling them not to worry.
Those 130,000 who escaped self-assessment were the lucky ones. Thousands of others tried to call the Revenue self-assessment helpline but gave up. Even now I am getting accounts of attempts to get through lasting an hour or more before failing. But it is worth persisting.
The Revenue has told me that anyone who should not be in self-assessment can be taken out and have all fines cancelled. And the only way to get that done is to call.
The number is 0845 900 0444, wait for the main menu, press 3 and then 1. Lines are open 0800-2000 Mon-Fri and 0800-1600 Saturday.
Here are the eight questions you must be able to answer 'no' to:-
1.  Were you self employed or a partner in a business any time in 2010/11?
2.  Were you a company director?
3.  Was your income £100,000 or more?
4.  Did you get more than £10,000 in savings or investment income?
5.  Did you get more than £2,500 in untaxed income?
6.  Did you rent out property
7.  Did you get foreign income liable to UK tax?
8.  Are you an employee claiming more than £2,500 in expenses or professional subscriptions?
In addition to those eight questions HMRC might have added
9.  Are you a minister of religion (any faith)?
10. Is your state pension bigger than your tax allowance?
11. Are you over 65 with an income above £22,900 in 2010/11?
12. Did you have Capital Gains Tax to pay?
'Yes' to any of those may scupper your chances too. But if you have what my Dad would have called 'a nap hand' of 'no' to all twelve then you should not have been told to fill in a tax return for 2010/11 and you can come out of self-assessment and get all penalties cancelled.
Even if you answer 'yes' to the odd question or two it is still worth trying. And definitely worth looking at HMRC's guide to who has to be in self assessment It has more detail than the lists above.
If you stay in self-assessment and do not file your return the fines are not over yet. The £10 a day penalty ends on 29 July. But then another £300 is charged on 1 August and another £300 on 1 February 2013. By then of course the 2011/12 return will be late as well! Interest - currently 3% pa - can be charged on late paid penalties.
Those fines apply even if you owe no tax. So make that call and hang on. Remember it is cheaper to call 0845 numbers from a landline than a mobile - they may even be included in your price plan. If you are abroad you can call +44 161 931 9070 with apparently much less delay and annoying verbiage than on the UK 0845 number.
If you owe tax then those £300 fines are the minimum. If the tax due is more than £6000 then you will be fined 5% of that amount instead.
In addition there are extra penalties added to the tax you owe - 5% is added on 1 March, 31 July, and 31 January 2013. And interest - currently 3% pa - is charged on all tax due and on the late filing fines. Phew!
So if you cannot come out of self-assessment get that return filed as soon as you can.
The dates given above are the standard dates. They can be later if you were not sent a form or told to file a return in April 2011. See for full details.
If you have not filed your return but have a reasonable excuse for not doing so then you can be let off the penalties. More details here if you were serving overseas in the armed forces at the relevant date that can also be a reasonable excuse for being late.