Of the nine million people required to file self-assessment tax returns one million miss the 31st January deadline.
The habitual offenders cause extra work and incur HM Revenue & Customs in additional cost.
Inflation has rendered the penalties ineffective.
In 2009 it was announced that HM Revenue & Customs would become more targeted and would apply increased penalties from this tax year 2011/2012.
The penalty will now be the same £100 for late filing and a further £100 if the return has still has not been filed six months later.
In addition there will be the 5% charge of the tax unpaid after a month.
After a further three months there will be a fine of £10 per day after three months with a maximum payable of £900 and ten per cent of the tax outstanding or £300 whichever is the higher.
If filing remains outstanding after one year there will be a further ten per cent to pay with a potential fine of seventy per cent of the tax outstanding if the failure continues.
Annual interest is payable as normal at the rate of three per cent throughout.
To give you some idea how this compares with the previous regime the penalties for a return six months late rise steeply whereas the previous cost was hardly a deterrent.
No tax to pay, previous regime £200 and now it will be £1,300.
Previously the £200 would not be collected.
If the tax payable is £1,000 under the previous regime £215 would be payable but now it will be £1,415.
Where the tax outstanding rises to £10,000 the penalty under the previous regime would have been £350 but now it has risen dramatically to £2,650.
Previously if the return form was late but there was no tax payable there was no penalty; that will no longer be the case and the new penalties will apply.
It will be interesting to see if this achieves the desired result.
I fear not; the head in the sand approach is unlikely to react unless persistently prompted.
I also feel that inflation should not be allowed to reduce the effectiveness of this new regime Keeping good effective records should ensure that when it is time to file your tax returns there should be no problems, if using an accountant it will also keep their time and your costs to a minimum.
The habitual offenders cause extra work and incur HM Revenue & Customs in additional cost.
Inflation has rendered the penalties ineffective.
In 2009 it was announced that HM Revenue & Customs would become more targeted and would apply increased penalties from this tax year 2011/2012.
The penalty will now be the same £100 for late filing and a further £100 if the return has still has not been filed six months later.
In addition there will be the 5% charge of the tax unpaid after a month.
After a further three months there will be a fine of £10 per day after three months with a maximum payable of £900 and ten per cent of the tax outstanding or £300 whichever is the higher.
If filing remains outstanding after one year there will be a further ten per cent to pay with a potential fine of seventy per cent of the tax outstanding if the failure continues.
Annual interest is payable as normal at the rate of three per cent throughout.
To give you some idea how this compares with the previous regime the penalties for a return six months late rise steeply whereas the previous cost was hardly a deterrent.
No tax to pay, previous regime £200 and now it will be £1,300.
Previously the £200 would not be collected.
If the tax payable is £1,000 under the previous regime £215 would be payable but now it will be £1,415.
Where the tax outstanding rises to £10,000 the penalty under the previous regime would have been £350 but now it has risen dramatically to £2,650.
Previously if the return form was late but there was no tax payable there was no penalty; that will no longer be the case and the new penalties will apply.
It will be interesting to see if this achieves the desired result.
I fear not; the head in the sand approach is unlikely to react unless persistently prompted.
I also feel that inflation should not be allowed to reduce the effectiveness of this new regime Keeping good effective records should ensure that when it is time to file your tax returns there should be no problems, if using an accountant it will also keep their time and your costs to a minimum.