Question to the HM Treasury:

To ask the Chancellor of the Exchequer, if she will make an assessment of the potential merits of (a) abolishing and (b) capping the penalty for a single missed tax return for people earning less than £50,000.

The tax system contains obligations, set out in law, to ensure that HMRC can collect the correct tax to fund vital public services. HMRC is bound by law to apply penalties where customers do not meet these obligations. Penalties also help to reassure customers who comply with their obligations that HMRC are applying the rules fairly and consistently.

For Self Assessment (SA), HMRC requires the information from customers in their tax returns to determine whether they have Income Tax to pay. Even if a customer has no tax to pay, the information provided can ensure taxpayers receive the benefits to which they are entitled, such as Tax-Free Childcare. The current policy and legislation on SA penalties has been in place since 2011.

The government will soon introduce a new penalty regime for late filing of SA returns and late payment of income tax. As well as reducing the penalties a customer can accumulate for filing late, this will introduce a further safeguard so people will not receive a financial penalty for a single failure to file on time. The penalties will focus on people who repeatedly file late.

Where HMRC charges a penalty, a customer can appeal. HMRC will cancel any penalties where they accept that a taxpayer no longer needs to be in SA or has a reasonable excuse for not filing their return on time.

HMRC regularly reviews its guidance and communications, including making it easier for customers to explain why they were unable to file their return and to inform HMRC if they no longer need to be in SA.

HMRC has dedicated support in place for those facing personal difficulties and encourages anyone struggling to meet their obligations to contact them as soon as possible by phone or online.