Taxpayers face increased fines as 1.1 million miss tax return deadline

In the United Kingdom, a significant number of taxpayers failed to file their self-assessment tax returns by the 2024 deadline. Reports indicate that approximately 1.1 million individuals did not meet this obligation, which has raised concerns about the effectiveness of HM Revenue and Customs (HMRC) in managing tax compliance. In light of this situation, Chancellor Rachel Reeves announced new regulations to increase penalties for late tax payments, including income tax self-assessment and VAT. These changes are scheduled to take effect in April 2025, indicating the government's effort to bolster tax revenue amid various fiscal challenges. The new rules stipulate that individuals who file their VAT and income tax returns late will incur a 3% penalty on any outstanding bill overdue by 15 days, which is a one percentage point increase from the existing rate. Furthermore, if the payment is overdue by 30 days, the penalty increases by another 3%, with an additional 10% charge per annum applied if the tax remains unpaid for more than 31 days. The government aims to raise upwards of £1 billion in extra tax revenue through these measures, emphasizing its intent to capture more tax from self-employed individuals utilizing the Making Tax Digital platform. This push is viewed by some analysts, such as Susannah Streeter from Hargreaves Lansdown, as an opportunity for the government to efficiently increase revenue rather than a burden on taxpayers. Concerns remain over the customer service aspects of HMRC, as the Public Accounts Committee previously criticized the department for perceived inadequacies in servicing taxpayers. This criticism arose as thousands of customers reported long wait times when attempting to speak with advisors, further contributing to a wider debate about taxpayer trust in HMRC's capabilities. Ultimately, the changes being rolled out underline ongoing issues regarding tax compliance and the efforts undertaken by the government to enhance revenue collection in an increasingly digital landscape.