Treasury nets pounds 100m as taxpayers miss January deadline

The Government yesterday admitted that nearly a million taxpayers had failed to send in self-assessment tax returns on time for last Saturday's deadline, netting the Treasury up to pounds 100m in fines. But ministers made a surprise concession to those who made innocent mistakes by offering a week's extension to some.

Dawn Primarolo, the financial secretary to the Treasury, set a new deadline for taxpayers who make mistakes. Taxpayers will now have until the 11 February to correct and return the forms.

An estimated 400,000 taxpayers - just under 5 per cent - made oversights in filling in their tax returns and had them sent back. Many faced a pounds 100 penalty for missing the deadline because of unwitting errors.

"In this first year of self assessment, I am prepared to be flexible. Where forms which were already returned to taxpayers are corrected and sent back by 11 February, they will be regarded as having met the deadline," Ms Primarolo said.

Final figures show that 810,000 taxpayers missed the deadline altogether, plus 70,000 partnerships and 20,000 trusts. Those who missed will be fined pounds 100 each unless the tax liability is less than pounds 100.

The taxpayers who missed the deadline will not only face a fine. They will also receive estimated bills from the Revenue - usually higher than their own estimates. A surcharge of 5 per cent will apply to tax outstanding by the end of February.

Accountants yesterday attacked the Treasury for being far too harsh - given its own record of mistakes.

These included a failure to publish essential software, needed to process forms, before October. Accountants normally start work on tax returns at least nine months before deadline.

Nigel Eastaway, of the Chartered Institute of Taxation, said: "The concession is welcome but it doesn't go far enough. We think it's a bit harsh when a lot of people have been burning the midnight oil to get the forms done. It would have been appropriate as a gesture for the Revenue to have adopted a lighter touch."

Only those who have what the Revenue thinks is a "reasonable excuse" will be let off. Excuses such as "the tax return was too difficult" or "My accountant was slow" are not thought reasonable. Reasonable excuses include a flood in the Post Office, theft of tax records or the death of a close relative.