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Accountants urge Brits to combat taxman as penalties spike to new document

The worth of HMRC tax penalties surged by 25 per cent between 2022 and 2023 to its the best stage on document, new knowledge exhibits, as the federal government faces criticism for unfairly fining struggling companies.

HMRC imposed £851m in penalties between November 2022 and October 2023, up from £681m in 2021/22, based on knowledge obtained by accountancy agency UHY Hacker Younger via a freedom of knowledge request.

The worth of tax penalties has risen constantly over the past three years.

Sean Glancy, a associate at Hacker Younger, stated these fines could possibly be an “straightforward win” for the federal government because it chases tens of billions of kilos in excellent tax debt.

The agency added that the rise in penalties put additional strain on people and companies who’re struggling to pay on time because of excessive rates of interest and the specter of recession.

“HMRC continues to widen the web for tax penalties, so individuals who weren’t captured earlier than are getting caught now,” Glancy stated.

“These penalties are extraordinarily unhelpful as people and companies proceed their post-pandemic restoration.”

The federal government final yr launched a penalty-based factors system for all VAT returns which might be submitted late, changing a default surcharge.

Penalties had been additionally prolonged to nil or reimbursement returns which might be acquired late, which Hacker Younger stated made it simpler to set off fines via easy paperwork errors.

Glancy argued: “HMRC is usually not cheap in eradicating penalties for real errors – they generally appear to function with a ‘shoot first, ask questions later’ method. As soon as a penalty is issued, the method is sort of draconian, nonetheless about half of penalties are withdrawn on attraction.”

The agency suggested people and companies to attraction fines, arguing {that a} “vital quantity” are withdrawn when challenged.

An HMRC spokesperson stated: “We’re dedicated to serving to clients pay the tax they owe, on time.

“We cost penalties to encourage clients to satisfy their obligations, whereas performing as a sanction for many who don’t.

“If clients are unable to pay on time, they’ll contact us to debate their choices.”