600,000 HMRC penalties issued to low-income earners who owe no tax
In the past five years, 600,000 people who owe no tax have been charged HMRC late-filing penalties. The penalties start at £100, but can snowball into four- and five-figure debts: one woman with severe mental-health difficulties was pursued for £10,000; another was driven into bankruptcy.
A system that was intended to encourage timely tax filing has become, in the words of retired tax judge Richard Thomas "the most punitive in the world" for people on low incomes.
The previous Government promised to scrap the penalty for a single missed return and cap any bill at £200 - but this reform has vanished into the long grass.
It's unjust. The Government should act, and stop the most vulnerable in society having their lives made harder by HMRC.
The scandal with regard to the self assessment £100 penalty is that, of course, originally the penalty was limited to the amount of tax due - thus if you filed your tax return late but owed no tax, no penalty was charged. It was a deliberate act of government to remove this limitation to the penalty charge which now hits the most vulnerable and probably individuals who should not have been in the self-assessment system to start with.
The great thing is that if you are rich you can just make a little side deal with HMRC and avoid any further serious bother.