HM Revenue and Customs handed out fines to 184,000 people paid less than £12,500 a year – the level under which people were then not subject to income tax – in the 2020-21 financial year for failing to complete a self-assessment tax form on time.
Many who were fined by HMRC were already in financial distress and some were issued with fines amounting to thousands of pounds.
The Guardian reported, Diana Cabral, 61, from Chichester, was fined £100 for not filing the self-assessment form, despite being employed full-time and is PAYE where by she pays income tax direct from her salary.
She said, “I thought this was a mistake so I disregard the notice. I ended up paying more than £2,000.
“I’ve appealed several times without success. I was poor before, I’m even more poor now. I don’t have any savings to pay the fine.
“I had to make an agreement to pay £20 a month. It is going to take years.”
Bradley Post, MD of RIFT, said, “It’s disappointing to see that HMRC have devoted such time and energy in penalising those at the very bottom of the ladder when it comes to their failure to submit a tax return, despite owing nothing in tax to begin with and especially given the tough economic landscape we find ourselves in.
At the same time, those seeking advice and guidance from HMRC are subject to long delays and inadequate communication channels, an issue that has been made all the worse by their decision to close their self-abasement tax helping.
So it’s fair to say that the resources used to pursue the hardworking individuals who don’t owe any tax to begin with could be far better used in addressing their own operational inefficiencies.”
Dan Neidle, a tax campaigner and founder of TPA, said, “We believe the law and HMRC practice should change. Nobody filing late should be required to pay a penalty that exceeds the tax they owe.”
“People are falling into debt and, in one case we’re aware of, becoming homeless as a result of HMRC penalties. Advisers working with low-income taxpayers see this kind of situation all the time, and filing appeals for late-payment penalties often makes up a significant amount of their work.”