Some 850,000 tax penalties have been issued to people who failed to complete their 2010/11 self-assessment on time, according to HM Revenue and Customs.

HMRC says the figure is 550,000 people fewer than the same time last year.

Anyone who failed to send their assessment in by the 31 January deadline was given an automatic £100 fixed penalty.

If each person paid this fine in full, this could net HMRC an estimated £85m.

A further penalty of £10 per outstanding day will be given if a person fails to return it after three months.

If a person has been sent a late-filing penalty and believes they have a reasonable excuse, they can appeal the decision in writing by 31 March.

Examples of reasonable excuses include family illness or delay in receiving an online activation code.

HMRC also extended the deadline until 2 February for online returns due to strikes at HMRC call centres.

HMRC’s Stephen Banyard said: “We want the return, not the penalties. So anyone who still hasn’t sent theirs should do so as soon as possible.

“People who receive a penalty notice should act now to avoid further penalties. They should send in their return, appeal if they think they have a reasonable excuse, or contact us if they think they shouldn’t have been in Self Assessment.”