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Half A Million Handed £1,200 Tax Penalty

(c) Sky News 2012

HM Revenue & Customs (HMRC) has begun sending penalty notices of at least £1,200 to around half a million people who have failed to submit self-assessment tax returns.

Officials say letters detailing the costs are being rolled out from today after several reminders relating to the 2010/11 tax year went unheeded.

However, the number of UK taxpayers affected by the charges has almost halved, down by 44% on last year, meaning 518,000 penalties are being issued.

HMRC said 5.9% of self-assessment taxpayers failed to complete their returns compared with 10.7% in 2011.

Changes were introduced in April last year to boost incentives to file them and cut the cost of chasing up missing forms, meaning anyone who ignores their self-assessment filing obligations will be liable to higher penalties than in previous years.

The letters being issued include a maximum £900 penalty for non-filing alongside a further late-filing penalty of £300 or 5% of the tax due, whichever is higher.

HMRC's director general for personal tax Stephen Banyard said: "We want the returns, not the penalties.

"Where someone has a reasonable excuse for not sending a return on time, we will waive the penalty.

"We also recognise that there will be some people within this group who don't need to be in self-assessment, and we will be happy to remove them from the self-assessment system and cancel their penalty."

The extra charges over the next few weeks are in addition to #100 late filing penalties for missing the January 31 filing deadline, which were sent out in late February and early March.

HMRC said people can appeal against the charge if they believe they have a reasonable excuse for not sending their tax return, such as a family illness or bereavement.