Question to the HM Treasury:

To ask the Chancellor of the Exchequer, whether his Department has made a recent assessment of the potential impact of issuing late filing penalties on self-employed people with incomes below the personal allowance, in the context of increases in the cost of living.

HMRC issues SA tax returns to customers when the information they hold suggests that the customer meets the published criteria for completing one. HMRC often cannot determine someone’s tax liability until they have sent in a tax return, therefore they need the return to establish whether there is tax due or not.

HMRC charges late final penalties to encourage customers to file on time but they can cancel a customer’s late filing penalty if they have a reasonable excuse. Customers can also ask HMRC to remove them from the SA process for future years if they no longer meet the criteria.

HMRC is currently reforming late payment and late filing penalties. Their aim is to encourage those who persistently default to comply with their tax obligations rather than penalise those who make occasional errors.