HMRC: Millions yet to file tax returns as deadline looms

Millions of people have still not filed their online self-assessment tax returns for which the deadline is midnight, meaning they could be fined £100, HMRC has warned.

More than three million people who risk the penalty are being advised to go online for help and advice, and to use the app to pay any outstanding tax once their return is submitted.

For the first time, online platforms such as eBay and Vinted must tell HMRC about sales information from people selling 30 items or more or who earned at least £1,700.

The authority will assess those details against individual tax returns.

If the midnight deadline is missed, an initial £100 fixed penalty is issued, which applies even if there is no tax to pay.

“Customers’ reasons for not paying their tax bill or arranging a payment plan by the deadline will be considered individually,” said Myrtle Lloyd, HMRC’s customer services director.

After three months of not paying tax due, additional daily fines of £10 per day are applied, up to a maximum of £900, with further penalties after six months and a year, including added interest on top.

Around 8.6 million people have already declared their tax for the year 2023-24, including small businesses and those with extra income outside of their jobs.

Accountant Benedicta Egbeme, founder of BeniRatio Finances, told the BBC that people need to complete a self-assessment form if their self-employment income is more than £1,000, and for hobbies and side hustles such as eBay and Vinted.

Companies like these are now required to share sales data and personal information on sellers.

The rules, which took effect in January, do not mean there is a new tax charge for these sellers, just that more information is shared to ensure they are paying the correct amount of tax.

“We cannot be clearer – if you are not trading and just occasionally sell unwanted items online – there is no tax due,” HMRC said.

“As has always been the case, some people who are trading through websites or selling services online may need to be paying tax and registering for self assessment.”

Those most likely to be affected are people who buy goods for resale or make goods with the intention of selling them for a profit, or offer a service such as being a delivery driver or letting out a holiday home.

“Tax generally can be quite an intimidating topic,” Ms Egbeme told the BBC.

But she said even though the UK tax system is “complex and daunting,” people should not “bury their head in the sand” because of the fear from not engaging with the system.

Ms Egbeme said reasonable excuses not to submit on time include: bereavement, being sick/unwell to the point of being admitted to hospital, or dealing with a life-threatening illness.

Other reasons that will be taken into account are software failure, issues with your personal computer, HMRC online services, and “destruction of property, files, paperwork by fire, flood or theft”.

She said appeals against a fine can be made either by filing in a form or by writing a letter to HMRC – but a return must be submitted.

“In fact, HMRC do not consider appeals until your tax return has been submitted and payment has been made,” Ms Egbeme said.

HMRC is also warning that customers need to be aware of the risk of falling victim to scams which can increase during tax deadlines, and that people should never share their HMRC login details with anyone.

HMRC recently denied running a “deliberately poor” phone service in an attempt to push taxpayers to seek help online instead.

Chief executive Jim Harra said the claims by a committee of MPs about its customer service were “completely baseless”.