Taxpayers will become subject to new fines from HMRC that came into effect on 17 February, the Institute of Chartered Accountants in England and Wales (ICAEW) has warned accountants.

A financial penalty of up to £1,600 will be imposed on taxpayers who fail to file their 2010/2011 returns. With HMRC employees going on strike this year, the deadline was extended to 3 February. Fines will have to be paid, even if taxpayers owe nothing or are entitled to a refund from HMRC.

Missing the 31 January deadline resulted in about £2bn being in question for the HMRC last year, when 14% of taxpayers failed to submit their return in time. An estimated 11% of those, or roughly 1.1m people, still have not managed to do so.

Fines start at £100, for failing to meet the deadline, and increase over time. An extra £10 a day is generated for a three-month period starting on 1 May, to a maximum of £900. From 1 August one of two alternatives is added - either £300 or 5% of the tax due, whichever is highest. The same penalty is once again applied for the period up to 1 February 2013.

According to Anita Monteith, ICAEW's technical manager of SME and personal tax, HMRC will be issuing regular reminders to taxpayers, so it is important that they take notice and act before the daily fines are imposed.

E advice@hwfisher.co.uk