HMRC to Yield £6 Million in Fines Per Day 
It has been revealed that as a result of harsher penalties which took effect earlier this week, HMRC is now imposing over £6 million in fines each day on 650,000 taxpayers who have failed to file their tax returns.

Estimates have suggested that 850,000 taxpayers missed the January 31st 2012 deadline, each receiving a fixed penalty of £100; whilst 650,000 tax returns were still outstanding on May 1st 2012, with each of these now incurring an additional fine of £10 per day it is outstanding, which can total a maximum of £900.

In addition to the fines already imposed for missing HMRC’s deadlines, the tax office have also announced they will be imposing extra penalties of £300 or five percent of any tax liability, plus a further £300 or five percent of the outstanding tax if the return still isn’t received after a year.

The total of fines could see HMRC yield over £6 million a day; but Stephen Banyard from HMRC said: “We want the returns and not penalties. So, if you haven’t sent us your 2010/11 return, you need to do so urgently – or call us if you think you shouldn’t have to complete one.”

Although HMRC could potentially yield over £6 million in fines, the organisation have admitted that 12,000 people have been wrongly fined for failing to file their tax return; despite there being no need for them to complete a self assessment return.

HMRC is now writing to those wrongly fined to apologise; and they have also published a statement on the Chartered Institute of Taxation’s website confirming that they will not have to pay any penalties.

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Bank of England Could Have Done More 
The head of the Bank of England, Sir Mervyn King, has admitted that the central bank failed to do enough to warn about the risks building up in the banking sector, ahead of the financial crisis.

Speaking at a lecture in London yesterday (May 2nd 2012), Sir Mervyn King said the bank was not blind to what was happening in the financial markets and it had tried to warn that the risks were being underestimated.

However, he admitted the banks could have tried harder, saying: “We did preach sermons about the risks. But we didn't imagine the scale of the disaster that would occur when the risks crystallised.

“With the benefit of hindsight, we should have shouted from the rooftops that a system had been built in which banks were too important to fail, that banks had grown too quickly and borrowed too much, and that so-called 'light-touch' regulation hadn't prevented any of this.”

Along with admitting that the Bank of England could have perhaps done more to warn about the financial risks; Sir Mervyn King also demanded that the financial system went through an urgent reforming, stressing that an overhaul which should include the separation of retail banking from “risky investment banking” was essential “to make our economy safer.”

His comments are set to add pressure on the Chancellor, George Osborne not to cave into the banking lobby and instead press ahead with planned legislation to ringfence retail banking by 2015.

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Third of Workers to Pay Higher Tax 
Figures released by the tax office show that almost a third more workers are set to pay tax at the higher threshold of forty percent during the current financial year; pushing the total paying the higher rate tax to over four million.

The increase in higher-rate taxpayers is being attributed to reductions in the threshold for the forty percent tax, combined with the “fiscal drag” which sees tax bands staying where they are, instead of moving up with inflation, which results in inflation-linked wage increases pushing more people into the higher rate tax bonds.

John Whiting, from the Chartered Institute of Taxation (CIOT): “The combination of that happy couple, fiscal drag and cuts in the higher rate threshold, is pushing more people into the higher rates where they can contribute more to cutting the deficit.”

However, a spokesperson for the Treasury has argued that the higher rate tax threshold remains the same as last year; adding: “The increase to the personal allowance in 2012-13 has not created new higher rate taxpayers, although there will be some people whose income increases over the two years, meaning that they move into the higher rate.”

Although the number of higher-rate taxpayers has been estimated to increase over the next year; figures from the tax office have also revealed that the total of taxpayers during the financial year is set to decrease to fewer than thirty million.

The drop in taxpayers is due to the lowest paid being removed from the tax system altogether following an increase in personal tax allowance.

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HMRC’s Charity Gift Aid Payments Revealed 
As criticism continues to be levelled at the government in regard to their proposed cap on charity tax relief, HMRC have published figures showing the amount it gave in gift aid payments to charities last year.

The figures, compiled by HMRC’s personal taxes division, were citied by the Exchequer Secretary David Gauke in response to a parliamentary question; and they show that last year, HMRC made gift aid payments to charities totalling £1.075 billion.

In addition, HMRC also paid £360 million back to higher-rate taxpayers in tax relief on charitable donations.

More worryingly for HMRC and the government, the latest figures show that since gift aid replaced covenants at the turn of the millennium, basic-rate tax repayments made to charities have increased by almost sixty percent; whilst higher-rate relief returned to taxpayers has increased by two-hundred and sixty percent.

HMRC’s figures are said to provide real evidence of the scale of the problem the government it attempting to address through its proposed cap on tax reliefs; as they show that the cost of the gift aid system to the Exchequer has been growing steadily year on year, and shows no signs of levelling off on its own.

It is believed that by capping the tax reliefs available and thereby encouraging higher-rate donors to give less, HMRC will not only have to pay out less in higher-rate tax relief to the donor, but also less in basic rate repayments to the charities.

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Think-Tank Call for Purse Strings to be Loosened 
The leading think-tank, the Organisation for Economic Co-Operation and Development (OECD) have suggested that the government should consider borrowing more to pay for vital infrastructure projects, in a bid to stimulate the UK’s economy.

Following last weeks news that the UK had fallen back into recession, the Chancellor, George Osborne said: “The one thing that would make the situation even worse would be to abandon our credible plan and deliberately add more borrowing and even more debt.”

However, it looks as though, despite previously backing the Chancellor’s austerity plans, the OECD’s opinion differs, with the think-tank saying that George Osborne could let the debt-reduction target slip a year without suffering a backlash in band markets.

The acting head of the OECD’s UK desk, Christophe Andre has said that the UK government could respond to the double dip by “letting the automatic stabilisers play and doing a little more infrastructure investment – partly financed by other measures such as changes to VAT and a bit more borrowing.”

Mr Andre also said: “I don’t think the markets would react adversely if the deficit kept on track on a cyclically-adjusted basis but debt came down a year later than planned” adding that he was talking about something small, up to about half a percent of GDP, which would equate to about £7.5 billion more borrowing.

The latest comments from the OECD is not the first time that the think-tank has suggested the Chancellor loosen the purse-strings; with similar calls coming in May last year.

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