The number of people "let off" could be as many as hundreds of thousands, although more than half a million are expected to face the pounds 100 fine.
The concession affects those who sent back their return in time for last weekend's deadline only for it to be rejected - in many cases for forgetting to sign it. Previously the Revenue said taxpayers would need to get revised returns back by 31 January.
Rejected forms now have up to two more weeks' grace. Returns rejected in January will have the new deadline of 11 February, and those rejected subsequently (but which still hit the original deadline) will have two weeks from the time when they were rejected. The Revenue has already ruled thousands of returns invalid because of mistakes or omissions. More are expected to be rejected in coming weeks as it gets through the 2 million- plus forms sent back in January.
The number of people who missed the 31 January deadline - 810,000 individuals and a further 90,000 other taxpayers (11 per cent of self-assessment taxpayers) - was lower than expected. In announcing these figures and the reprieve, Dawn Primarolo, the financial secretary to the Treasury, said: "In this first year of self-assessment, I am prepared to be flexible."
Ms Primarolo said that other people might also escape the pounds 100 penalty, or part of it. As well as those with a "reasonable excuse", people who received returns recently have a total of three months before they face fines, while people who owe less than pounds 100 will not be fined more than the tax they owe.
The "reasonable excuse" that appears to offer the greatest degree for "abuse" is saying that the tax return form was never received. It would be difficult for the Revenue to prove that a return had not got lost in the post. People who live in shared houses, have moved house, or who have taken holidays are those most likely to be reprieved.
The Revenue will also look kindly on those who have lost a partner or close relative. These excuses are detailed in a free booklet, Self-Assessment Penalties (reference SA/BK6), as are the unacceptable excuses, which include failings by a tax agent and not having the right paperwork. "My wife lined the bottom of the budgie's cage with the return is not reasonable," said a spokeswoman.
The Revenue will be sending out "penalty notices" for the pounds 100 fines at the end of this month, and it is then that people should appeal in writing if they think they should be excused.
However, the tax office is giving no hints of concessions on interest penalties. People with tax outstanding after 31 January are already notching up interest at a rate equivalent to 9.5 per cent a year. But if you have not paid this tax by 28 February there is a surcharge of 5 per cent of the unpaid tax, and a further 5 per cent on tax outstanding on 31 July.
Over coming months 9,000 people will face random "inquiries" into what they have said on their tax returns, while perhaps as many as 50,000 others will face inquiries specifically because of what they have - or have not - declared. In many cases taxpayers subject to inquiries will be asked to produce some supporting paperwork. "We are not talking about dawn raids," said a spokeswoman, although some inquiries could develop into full investigations including face-to-face meetings with officials.
David Brodie of TaxAid, a charity, advises those subject to inquiries to be honest and co-operative. Revenue officials have significant discretion over penalties. Taxpayers should say if they forgot to put something on their return - and if possible give a reason. If someone is bemused at being targeted, they should phone the Revenue and ask why.Reuse content