HMRC’s current figure of tax overdue on self-assessment returns for 2017/18 is £1.6bn, which is expected to rise further as more returns are submitted for that year. That compares to a final figure of £1.83bn for 2016/17. The figure of tax paid late has been rising for the last three years, from £1.76bn in 2015/16 and £1.65bn in 2014/15.
According to accountants UHY Hacker Young, the upward trend could be linked to the rising number of self-employed people, many of whom are filing self-assessment returns for the first time. In March 2019, the number of self-employed in the UK reached a record high of 4.93m.
Neela Chauhan, partner at UHY Hacker Young, believes the increasing incidence of late payment may be compounded by HMRC becoming less sympathetic when considering penalties. HMRC can impose a penalty of 5% of the tax owed on individuals who are six months late paying, with a further fine of 5% if they are 12 months late.
In 2017/18 to date, HMRC has cancelled just 8% of late payment penalties, compared to 22% in 2016/17 (£516m out of £2.35bn), and 22.9% in 2015/16 (£523m out of £2.29bn). The number of penalties receiving lenient treatment has fallen year-on-year for the last four years, with 14,100 six-month penalties cancelled or adjusted in 2016/17 compared to 24,900 in 2013/14. The number of 12-month penalties cancelled in 2016/17 was 2,800, compared to 14,200 in 2013/14.
The number of six-month late-payment penalties climbed steadily between 2012/13 and 2016/17, reaching a high of 116,700 penalties imposed in 2016/17, although there was a slight drop in the number of penalties issued after 12 months in 2016/17.
Chauhan commented: ‘The vast majority of taxpayers are fully intending to pay on time. However, they face a lose-lose scenario when they find it hard to do so. They could either choose to pay the full amount on time, risking the long-term health of their business or career because of the hit on their cashflow, or accept a potentially hefty fine further down the line.’
‘As the number of self-employed people continues to rise, the money owed through late payments is also likely to mount, Chauhan added.
HMRC’s current figure of tax overdue on self-assessment returns for 2017/18 is £1.6bn, which is expected to rise further as more returns are submitted for that year. That compares to a final figure of £1.83bn for 2016/17. The figure of tax paid late has been rising for the last three years, from £1.76bn in 2015/16 and £1.65bn in 2014/15.
According to accountants UHY Hacker Young, the upward trend could be linked to the rising number of self-employed people, many of whom are filing self-assessment returns for the first time. In March 2019, the number of self-employed in the UK reached a record high of 4.93m.
Neela Chauhan, partner at UHY Hacker Young, believes the increasing incidence of late payment may be compounded by HMRC becoming less sympathetic when considering penalties. HMRC can impose a penalty of 5% of the tax owed on individuals who are six months late paying, with a further fine of 5% if they are 12 months late.
In 2017/18 to date, HMRC has cancelled just 8% of late payment penalties, compared to 22% in 2016/17 (£516m out of £2.35bn), and 22.9% in 2015/16 (£523m out of £2.29bn). The number of penalties receiving lenient treatment has fallen year-on-year for the last four years, with 14,100 six-month penalties cancelled or adjusted in 2016/17 compared to 24,900 in 2013/14. The number of 12-month penalties cancelled in 2016/17 was 2,800, compared to 14,200 in 2013/14.
The number of six-month late-payment penalties climbed steadily between 2012/13 and 2016/17, reaching a high of 116,700 penalties imposed in 2016/17, although there was a slight drop in the number of penalties issued after 12 months in 2016/17.
Chauhan commented: ‘The vast majority of taxpayers are fully intending to pay on time. However, they face a lose-lose scenario when they find it hard to do so. They could either choose to pay the full amount on time, risking the long-term health of their business or career because of the hit on their cashflow, or accept a potentially hefty fine further down the line.’
‘As the number of self-employed people continues to rise, the money owed through late payments is also likely to mount, Chauhan added.
