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The automatic penalty of £100 that is issued to those who miss the filing deadline for self-assessment tax returns may soon be scrapped by HMRC.

According to HM Revenue & Customs, the penalty system is currently unfair to those who have made an honest and uncharacteristic mistake. No matter whether a tax return is filed one day late, or three months, the automatic penalty is issued. HMRC is apparently contemplating a points system, which would operate in a similar way to driving licence points, so that repeat offenders are punished. This could mean that the large numbers of self-assessment customers who miss the filing deadline won’t receive a penalty.

Plans have recently been released for public consultation, before a final decision is made. A spokesman for HMRC said:

“We want to consider whether we could better differentiate between deliberate and persistent non-compliers and those who might make an occasional error.”

One of the suggestions by HMRC is for a points system, which would mean that the automatic penalty would be avoided, but if the taxpayer continued to be non-compliant, a more substantial penalty would be issued.

Reasonable excuses for missing the filing deadline are also going to be reconsidered. At present, HMRC will accept very few reasons for late filing as reasonable excuses. However, the organisation is now looking at relaxing those rules and making it easier to be compliant. For filing of the 2013-14 tax return, which should have been filed before 31st January 2015, 890,000 people missed the deadline.

Stuart Philips of The Private Office, a wealth management company, said that taking away the automatic penalty may remove the incentive for filing tax returns on time.

For those who fall under the self-assessment rules, it pays to be aware of the relevant dates:

31st January

For the year 2014-15, the first payment on account is due by 31st January 2015. This is also the date when any tax due from the previous year is due to be paid by and a self assessment tax return has to be submitted by.

5th April

This is the end of the tax year and, very soon after this date, paper tax returns are issued. If you are registered to file your tax return online, a reminder notice will be issued.

31st July

This is the date when a second payment on account has to be made, although not all self-assessment taxpayers have to make payments on account.

31st October

This date is when a paper tax return has to be filed by. If this date is missed, a tax return can still be filed online before 31st January.

There are more dates applicable to self-assessment taxpayers. If you want to know more about the dates or the late filing penalties, don’t hesitate in giving us a call here at The Accountancy Partnership.

About The Author

Karl Bilby

We work very closely with our expert accountants to bring you the latest factually correct tax and accounting news. We also enjoy writing about small business news that we hope you find useful!

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