Harsh penalties for late filing of self assessment (SA) forms come into force today and HMRC has started sending out penalty letters to half a million people who have not returned their 2010/11 tax returns.

The number of outstanding returns has almost halved in 2012, down to 5.9%, compared to 10.7% in 2011. This means 518,000 fewer penalties are being issued. HMRC has also taken 273,000 people out of self assessment this year.

Stiff new penalties for late filing were introduced in April 2011 and, as a result, anyone who ignores their SA filing obligations is now liable to higher penalties than in previous years.

The new penalties will be for a minimum £1,200, including a maximum £900 in daily penalties for non-filing and a further late-filing penalty of £300 or 5% of the tax due (whichever is higher).

People who receive a late-filing penalty can appeal against it if they think they have a reasonable excuse for not sending their tax return; for example, a family illness or bereavement.

Anyone who has received a late-filing penalty and has not sent in a return, but thinks they don't need to be in Self Assessment, can still potentially apply to be taken out of Self Assessment at www.hmrc.gov.uk/latetaxreturn. If HMRC agrees, the return and any penalty will be cancelled.

HMRC director general for personal tax, Stephen Banyard, said: 'We want the returns, not the penalties. This year, half a million more people have filed their return - which means we are issuing 44% fewer penalties.

'But, despite several reminders, nearly 6% of people have not sent their 2010/11 tax returns to us and they'll be getting a penalty.'

The latest penalties are in addition to £100 late-filing penalties for missing the 31 January filing deadline, which were sent out in late February and early March.