What have 1.1 million people in the UK got in common as at 1 February 2012?
Well unfortunately for these people the answer is that they owe the UK tax authorities £100.
The deadline for submitting the individual tax return for the tax year ended 5 April 2011 was 31 January 2012 (in case you’re wondering, here’s why the tax year ends on 5th April).
1.1 million people missed the 31 January deadline and were late in submitting their tax return. As a result they will be fined £100 each. This means a rather nice £110 million in extra revenue for the government.
This year the penalty system was different for people that submitted their returns late.
In previous years the fine was £100 but this fine was in fact limited to the amount of tax that was owed. So if somebody had a zero tax liability then there was no real incentive to submit the tax return by 31 January as the fine was restricted to zero.
This year the fine is £100 even if the individual’s tax liability is less than £100.
The fine gets worse as well though with an additional fine of £10 per day being applied if the return is 3 months late. The maximum fine for late submission could be as high as £1,600.
If you are a UK tax resident that has to submit a return but have yet to do so then it’s looking like you’ll be £100 worse off unless you’ve got a reasonable excuse for not submitting your return on time.
There’s no set definition of what is meant by reasonable excuse but it generally includes such things as the death of a close relative (or even your own death but that does seem an extreme way to avoid a £100 penalty), serious illness, loss of documents due to fire, or lack of time to complete the return as you were playing around on facebook.
Finally, for those of you that didn’t spot the mistake in the previous paragraph and are about to attempt one of the UK tax exams then don’t hold your breath expecting a great result…