The deadline for self-assessment tax returns has been extended by 24 hours.
The move was forced on HM Revenue and Customers after its online service repeatedly crashed, leaving thousands of self-employed taxpayers unable to submit their details.
HMRC had threatened people with an automatic £100 fine plus interest on any tax due if tax returns were not submitted by midnight on Thursday January 31st.
In a statement HMRC said: "HMRC takes any disruption of service very seriously and to reflect this no-one who files electronically or by paper by midnight Friday February 1st will face a penalty.
"We very much regret any inconvenience this may have caused."
The system is now reportedly returning to normal service.
HMRC says a record 3.6 million taxpayers have already filed their self assessment through the website, including 104,000 today, despite connection problems.
But the Conservatives have used today's crash as the latest weapon against the chancellor and HMRC, which last year lost the personal details of 25 million child benefit claimants.
Shadow chief secretary to the Treasury Phillip Hammond argued the system crash was "more evidence of the endemic incompetence at HMRC".
Mr Hammond said: "When will Alistair Darling get a grip?
"He's happy to threaten taxpayers with £100 fines if they don't send in their tax returns on time, but he can't even provide them with the basic tools to do the job."
- Today it was announced Mr Darling will announce his first Budget on March 12th, after ten years of Gordon Brown ruling the dispatch box on Budget day.