Revenue Penalties

Pauvre_Tom

I'm a bit puzzled by the level of penalty the Inland Revenue charges for late submission of a tax return. £100 seems a bit steep, especially in light of the big issue about bank penalties and the fact that they are only entitled to charge a 'reasonable' penalty. Any ideas on this matter?

Hoddie_2

The penalty is laid down in law. Bank penalties are not.

Cook_County

But if you disagree with the law you have the same power as the rest of and can vote for a different law and lobby your MP and the Chancellor.

In practice the penalties are a significant Revenue raiser for the government and so are unlikely to disappear.

Pauvre_Tom

Thanks for those observations, but what does the Government spend the money on? Is it itemised anywhere?

peter999

Pauvre_Tom wrote:

Thanks for those observations, but what does the Government spend the money on? Is it itemised anywhere?

What do you think, more schemes to raise more money.

peter999

lizzyb1812

If you were wanting to know on what the IR bases its calculation of the £100 fixed penalty, then I doubt you will ever find this out. This is not the same as the banks having to prove that their admin charges, etc are reasonable, and the IR have no need to account for how it is made up. It is probably £100 because this is deemed to be sufficiently severe to shake up people into getting their returns in by the due date.

lizzyb

Mikeyorks

Pauvre_Tom wrote:

£100 seems a bit steep ...

It's quite mild compared to the £60 per day penalty that can be imposed .. for continuing failure to file? It's also potentially mild compared to the 5% Surcharge imposed on SA tax still outstanding 28days after the due date - which is in addition to the daily interest rate.

lizzyb1812 wrote:

It is probably £100 because this is deemed to be sufficiently severe to shake up people into getting their returns in by the due date.

Not really. It's been £100 since SA was introduced ... in '97. And there's consistently close to 1M late filers each year - so it's not helping to close the gap? One might reasonably expect a hike in the rate soon.

Pauvre_Tom

Thanks to all, but I can't help thinking that there is something not right about this tactic. Not that I don't trust the Government, but in an age where everyone is increasingly accountable, why shouldn't the Government's use of the £100M (judging by Mikeyorks's estimate) be transparent? If it were going to support the homeless, for example, or boosting pensions for the next generation of workers, I might not mind, but there are other areas of Government expenditure I most definitely would!

Hoddie_2

The money collected in penalties is not ringfenced into a particular fund, ready to be earmarked for a particular use. It's simply added to the 'pot' as it were. There has to be something like this or else many more people than already do so would fail to submit their return on time - costing HMRC a lot of money to chase up those individuals (which given the amount of manual effort needed is probably one of the most expensive actions HMRC have to undertake) - we'd all have to pay for this extra manpower in the form of increased tax. Much better to let the defaulters pay for it!

Mikeyorks

Pauvre_Tom wrote:

Thanks to all, but I can't help thinking that there is something not right about this tactic.

Why is it a concern - if you're not contributing? And why is it any different to eg Interest collected by HMRC?

It's all specifically accounted for - see the Treasury site or the HMRC Annual Report. But GB does not have to identify this income as specific to any particular expenditure. Any more than he has to say how he will spend revenue collected from the 10% IT band, as opposed to the 22% band.

My wife works the housekeeping on the same non-attributable basis!:rolleyes:

Petmidget

They actually make roughly £40m from all late filing penalties according to latest figures this includes personal, partnership and corporate but the bulk will be from personal.

A lot of filing penalties are reduced/withdrawn when returns are eventually filed.

Personally I think the system is pretty good, from my pov as an accountant the penalty actually encourages my worst clients to get their stuff together so I dont have to spend the whole of Jan working 18 hours a day.

Just reviewed client list only 10 returns left to do, must be a record.