Increased penalties for late tax returns

Taxpayers will be hit with higher penalties for late self-assessment returns and unpaid tax under a tough new regime set to be announced within weeks. Revenue & Customs has been holding secret talks with the tax industry on ways the penalty regime can be used to plug the £3.6 billion hole in the public accounts. Insiders are expecting the chancellor to unveil the new rules in his pre-budget report due in the next month.

Word is that the Revenue will hike the £100 penalty for late returns to £250. Taxpayers who then find they do not owe any tax will no longer be able to reclaim the fine.

The taxman could also levy higher penalties on people who pay too little tax unwittingly — perhaps because they fail to keep proper records or take advice. In the worst cases, the Revenue has the power to fine up to 100 per cent of the unpaid tax. Someone who underpaid by £3,000 could end up paying as much as £6,000.

Follow this link for information on fines for late tax returns and overdue tax and how the tax enquiry process operates.