One million workers have still not filed their taxes
One million self-employed workers and investors have not filed taxes due in January and many are now expected to face millions of pounds in fines from HM Revenue & Customs, Telegraph Money has learnt.
Late payers will see bills rise by 5pc when they do eventually file tax returns because of a late payment surcharge. This usually kicks in 30 days after the January 31 deadline, however, was pushed back to the end of March after record numbers struggled to pay on time this year.
A 5pc fine on a £6,000 tax bill would cost £300. HMRC is unable to calculate the actual amount of fines owed until tax forms are submitted. Some 270,000 people have been hit with the 5pc charge so far. The surcharge is on top of a £100 fine already issued for not filing by the end of February.
Andy Chamberlain, of IPSE, a freelancer trade body said the situation was a grave concern given a quarter of freelancers had already taken on debt, just to get by while a fifth would have to borrow to cover taxes.
He said: "It is of course incumbent on all taxpayers to get their affairs in order and pay on time, but it has been an extraordinarily challenging year. Taxpayers who are facing difficulties should contact HMRC as soon as possible to explain their situation."
"However, we urge HMRC to be lenient in these extreme and unusual circumstances," he said. "Heaping further charges on those who are already struggling will only make matters worse."
Jay Sanghrajka of accountants Price Bailey said it was “shocking” so many had still not filed tax returns or settled bills.
“The longer they leave it the harder it will be to get their financial situation under control. They risk fines which will only compound their problems," he said.
"Even if taxpayers believe they do not owe anything because of bankruptcy or being unable to trade, they still need to file returns unless otherwise agreed with HMRC. Fines can still be imposed on taxpayers who do not owe any tax but fail to file a return."
Tax debts snowball if left unpaid, as interest and additional penalties for repeated tardiness mount. HMRC has the power to take money directly out of bank accounts or seize items from homes to sell at auction in order to recover unpaid debts, in the most extreme cases. It charges interest on late taxes at 2.6pc.
A record 1.8 million people missed the January 31 tax return deadline this year, almost double the 958,000 people who filed late in 2020 and more than double the 730,000 who missed the deadline in 2019.
Taxpayers normally face an immediate £100 fine for not filing by the end of January. HMRC waived this for a month, but 1.1 million still failed to get their taxes sorted by February, netting HMRC more than £100m in penalty income. Only 100,000 filed returns in March before the additional 5pc charge kicked in.
UK workers now owe more than £65bn, up 72pc since the pandemic began. Those struggling to pay can move their bills on to monthly payment plans. More than 665,000 people have payment plans in place at present.
HMRC has encouraged taxpayers struggling to meet bills to contact them to discuss payment plans and ways to settle outstanding debts.
