HC Deb 17 June 2002 vol 387 cc135-6W
Brian Cotter

To ask the Chancellor of the Exchequer what level of penalty is charged against those failing to submit returns to the Inland Revenue; how many businesses have received these penalties against them over the past three years; and what the total amount received by the Exchequer as a result of these fines was. [61312]

Dawn Primarolo

The Inland Revenue charges late filing penalties for Self Assessment (SA), Corporation Tax Self Assessment (CTSA) and Pay As You Earn (PAYE) tax. SA taxpayers failing to submit returns by the filing date are charged a £100 penalty and a second £100 penalty if they have not filed six months after the due date. The Inland Revenue can also seek penalties of between £10 and £60 a day at the discretion of the Tax Commissioners on SA taxpayers who persist in not filing a return. Employers and contractors failing to submit a PAYE return are charged a penalty of £100 per month the return is later for each 50 employees or subcontractors. Companies that are late in filing their CTSA returns are charged £100 if they file less than three months after the filing date, £200 if they are between three and 18 months late (if the company files late on three consecutive occasions, these penalties increase to £500 and £1,000 respectively), 10 per cent. of their unpaid tax if they are 18 months to two years late and 20 per cent. of their unpaid tax if they are more than two years late in filing. Businesses may be liable to submit a return as employers, or under the SA or CTSA regulations. But these regulations also include non-business taxpayers such as employees taxed at the higher rate who are within SA. The Inland Revenue does not distinguish between penalties charged on businesses and other types of taxpayers, so the figures that follow are for all penalties within SA, CTSA and PAYE.

The first table shows the number of penalties raised by the Inland Revenue from late filing penalties on returns over the last three financial years.

Penalties raised in the financial year ended:
Head of Duty 1999 2000 2001
PAYE1 130,000 120,000 150,000
SA2 1,400,000 1,600,000 1,500,000
CTSA3 170,00 180,000 220,000
1Rounded to the nearest 10,000
2Rounded to the nearest 100,000

The second table shows the total amount paid in respect of penalties over the last three account years (these run from November to October and are periods over which the Department's annual accounts are calculated).

Penalties paid (£) in the account year ended:
Head of Duty 1999 2000 2001
PAYE1 14,200,000 14,400,000 15,100,000
SA1 29,400,000 33,000,000 36,200,000
CTSA1 14,400,000 18,000.000 25,300,000
1Rounded to nearest £100,000

Mr. Rendel

To ask the Chancellor of the Exchequer what plans he has to prevent the issuing of penalty notices for £0 by the Inland Revenue. [61880]

Dawn Primarolo

The Inland Revenue have no plans at present to stop issuing penalty notices for nil.

Page I of the tax return states that the return should reach the Inland Revenue by 'the later of 31 January and 3 months after the date the notice [to make the return] was given, at the latest, or you will be liable to an automatic penalty of £100'.

The issue of a penalty notice lets the customer know that a penalty has been incurred. The nil penalty notice gives the customer who knows the return is late (and has no tax liability) confirmation that the penalty is capped at nil. As the penalty may not remain at nil (if, for example, the customer amends the return or tax becomes payable following an inquiry) it is important that the customer is aware that a penalty has been incurred.