Tax return fines to rise sharply
People who fail to send in their tax returns on time will now have to pay much higher penalties than before with a £10 a day fine set to come into effect.
HM Revenue & Customs (HMRC) has introduced a new system with escalating fines in a bid to crack down on people who regularly send their returns in late.
Any late returns will now be given a £100 fine on day one.
If the payment is still outstanding after three months, you will receive a £10 fine a day, to a maximum of £900.
After six months this will escalate again and you will be charged either 5% of the tax you owe or £300. If this reaches 12 months you will be face a higher penalty of up to 100% of the tax due or another fine of £300.
Even if you don't owe HMRC any tax or have already paid the tax you owe, you will still receive the penalty if your tax return form is late.
These penalties are on top of the interest HMRC will charge on all outstanding amounts, including unpaid penalties, until your payment is received.
The old system, which fined people an automatic £100, was "not much of a deterrent" according to HMRC which is now pushing the message of "the greater the delay, the greater the penalty".
Andrew Bennett, a spokesperson for HMRC, says around 10% of people currently send back their forms late out of an estimated nine million using the self-assessment process.
"We don't want to charge people these fines but it's the only way we can stop the problem of late returns. It costs us extra time and money when people send in forms in dribs and drabs," Bennett says.
An exceptional circumstances rule will still apply for late returns, for example if there are severe weather conditions or postal strikes. All penalty notices will include an appeal form and details on how to appeal.
Self-assessment paper forms have to be sent in by 31 October each year, and online forms by 31 January.