Question to the HM Treasury:

To ask the Chancellor of the Exchequer, how many self-employed people that did not file their tax returns on time were issued fines worth more than they originally owed in tax in the 2021-22 financial year; if he will (a) take steps to support self-employed people filing their tax returns and (b) make an assessment of the proportionality of fines issued to self-employed people for late filing of a tax return when there is no tax owing; and if he will make a statement.

HMRC cannot provide this information because data transfer and assurance processes between the live SA system and those used for analytical purposes are not yet complete for the year requested. In addition the penalty life cycle is not yet complete for 2021-22 and many late returns, which will inform Self Employment status and income, have not yet been submitted.

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.