HMRC’s approach to penalising self-assessment non-compliance should be overhauled to ensure it is fair and proportionate, according to a leading industry body.
The Low Incomes Tax Reform Group (LITRG) has accused the Revenue of failing to adequately differentiate between deliberate actions and unfortunate errors on tax returns. The group claimed that existing policies are “nothing short of oppressive” and accused HMRC of acting unfairly.
Currently, delinquent taxpayers face a £100 automatic penalty if they fail to submit their self-assessment return by the given deadline. These fines can quickly escalate, reaching more than £1,000 in a matter of months.
Although LITRG admitted that the Revenue had succeeded in ensuring that high net worth taxpayers are not shirking their responsibilities, it claimed that unrepresented individuals are being ignored and not taken into account.
The group said: “[The regime] has failed to distinguish between deliberate and persistent non-compliance and those largely non-culpable individuals who, owing little or no tax, nevertheless miss filing deadlines through ignorance, ill health or the intervention of life events such as bereavement, or who simply make mistakes.”
LITRG’s opposition is just the latest criticism of HMRC’s controversial self-assessment policies, which has seen the Revenue accused of demonising innocent taxpayers. Last month, data from Baker Tilly revealed that the taxman is more likely to conclude that errors have been made deliberately, rather than by mistake.
The research found that the proportion of fines issued for “deliberate behaviour” almost doubled from 9% to 16% between 2012-13 and 2013-14 – prompting critics to claim the Revenue is “hardening” its attitude in an attempt to bring in more money.
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