HMRC to rake in more than £100m in tax-return fines after Tory allowance freeze

THE taxman is set to rake in more than £100million in fines as the Conservatives’ freeze on allowances drags thousands into paying more tax.

About 1.1 million people missed the Jan 31 deadline, HM Revenue and Customs said. The figure is almost twice the level recorded last year, when 600,000 failed to submit their forms in time.

Tens of thousands more will need to file self-assessment forms for the first time this year as the Treasury’s has frozen income tax bands until 2028.

Late filers will be fined an initial £100, which applies even if there is no tax to pay or the tax due is paid on time.

HMRC was under pressure to extend the self-assessment deadline on Wednesday after taxpayers complained of 40-minute wait times. It has come under fire for its declining customer service levels, having missed all of its performance targets last year.

In December it revealed that it would only allow “priority” callers and the “digitally excluded” to speak with tax advisers on the phone from Dec 11 until the January deadline.

The move is part of the tax office’s effort to move taxpayers on to its digital services and away from its phone lines.

Sir Steve Webb, a former pensions minister and now partner at the consultancy LCP, said: “If you have to file a tax return there is something complicated going on in your finances.

“You’re either a higher-rate taxpayer, you’re self-employed or you’ve got rental income from a property. The freeze on the higher-rate income tax threshold is driving a lot of this.”

Harriett Baldwin, the MP for West Worcestershire, said the Treasury Committee would be writing to HMRC to understand the effect of the reduction of phone line capacity on waiting times and late fines.

Baroness Ros Altmann said it was troubling that the tax system was becoming more difficult for ordinary people to navigate.

“HMRC say they want to make things easier for taxpayers but if those who need to phone the helplines can’t get through and therefore don’t know how to fill in the return, they risk being penalised for non-compliance despite best efforts to do so,” she said.

“If you are working full time you can’t always reach HMRC or spend time hanging on for ages. I would hope that allowances will be made for those who can prove they tried to comply with the deadline but were unable to do so because their efforts were thwarted by lack of response.”

The delays have prompted the Institute of Chartered Accountants in England and Wales to call for a “fundamental review” of HMRC’S service performance.

Chris Etherington, of RSM, a tax adviser, said the tax office had become increasingly poor at alerting individual taxpayers when they needed to submit a self-assessment form.

“HMRC has reduced its correspondence significantly, likely as a cost-cutting measure,” he said. “But it is therefore not surprising that so many people have failed to meet the deadline.

“That has been compounded by the fact that people’s questions are just not getting through to HMRC.

“We have one of the most complicated tax systems in the world, so for people who are being dragged into this net for the first time, of course they will have questions and want to speak with a real person on the telephone.

Myrtle Lloyd, of HMRC, said that anyone who has yet to file and is concerned they cannot pay in full may be able to spread the cost of what they owe with a payment plan.

‘HMRC has reduced its correspondence significantly, likely as a cost-cutting measure’