HMRC’s new penalties for late returns could mean £1,600 fine
Discussion
http://blogs.telegraph.co.uk/finance/ianmcowie/100...
"Accountants are warning taxpayers to make sure they file their self-assessment tax returns before deadlines which begin to fall next month because new HM Revenue & Customs penalties mean late returns could be fined up to £1,600 each – even if you have paid all the tax due.
Stuart Aikman, a consultant at Smith & Williamson, said: “Some taxpayers are likely to fall into the trap of having got used to avoiding a late tax return filing penalty by paying sufficient tax in January, unaware that the goal posts have changed.
“While some people are very focused on paying their tax on time, they may be relaxed about meeting the deadline for filing their tax return so they need to be aware of the rule change. In the past, the fine was capped according to the amount of unpaid tax at the relevant dates, but that is no longer the case.”
He explained that a taxpayer who is one year late in filing his return could accumulate total penalties of £1,600 – even though he may have paid all the tax due – comprised of;
The deadline for tax returns for the year which ended on April 5, 2011, falls on October 31 if the return is filed on paper but not until January 31, 2012, if the return is filed online. You can find more information about how to complete your self assessment tax return here – and about deadlines and penalties here.
HMRC's tougher approach to late returns follows other campaigns to increase revenues by offering a series of tax amnesties to groups of people who may have failed to declare income, such as plumbers and online traders.
Seamus Murphy of the online accountants taxback.com, said that in previous years the penalty regime for late filing was relatively benign because of the £100 limit and added: “This gave no incentive for taxpayers to file if they thought they had no further tax to pay. That’s one reason almost a million taxpayers file their returns late each year.
“The new penalty regime however is considerably more aggressive and penalties could very quickly run into the thousands with further penalties such as interest and surcharges on top.”
Mike Warburton of Grant Thornton agreed: “This change will come as a shock to many taxpayers who have so far been able to avoid late filing penalties simply by ensuring that they did not owe any tax by the January 31 deadline.
“The problem is that HMRC are tasked by the Government to achieve filing targets for tax returns which they had been missing . They were finding that they had little effective sanction on those who knew that there was no tax due could avoid a fine by paying what was due.”
Despite HMRC’s making millions of errors in its own calculations of tax due, its new get-tough approach to late tax returns with a £10 per day tariff plus £300 ‘reminder penalties’ at three monthly intervals could turn into a nice little earner for the Treasury. You have been warned."
Cripes!
"Accountants are warning taxpayers to make sure they file their self-assessment tax returns before deadlines which begin to fall next month because new HM Revenue & Customs penalties mean late returns could be fined up to £1,600 each – even if you have paid all the tax due.
Stuart Aikman, a consultant at Smith & Williamson, said: “Some taxpayers are likely to fall into the trap of having got used to avoiding a late tax return filing penalty by paying sufficient tax in January, unaware that the goal posts have changed.
“While some people are very focused on paying their tax on time, they may be relaxed about meeting the deadline for filing their tax return so they need to be aware of the rule change. In the past, the fine was capped according to the amount of unpaid tax at the relevant dates, but that is no longer the case.”
He explained that a taxpayer who is one year late in filing his return could accumulate total penalties of £1,600 – even though he may have paid all the tax due – comprised of;
- Day one: an initial penalty of £100
- Three months late: an automatic daily penalty of £10 per day, up to a maximum of £900
- Six months late: an additional £300 or 5pc of any tax liability which would have been shown on the tax return, or whichever is higher
- 12 months late: a further £300 or 5pc of any tax liability which would have been shown on the tax return or whichever is higher.
The deadline for tax returns for the year which ended on April 5, 2011, falls on October 31 if the return is filed on paper but not until January 31, 2012, if the return is filed online. You can find more information about how to complete your self assessment tax return here – and about deadlines and penalties here.
HMRC's tougher approach to late returns follows other campaigns to increase revenues by offering a series of tax amnesties to groups of people who may have failed to declare income, such as plumbers and online traders.
Seamus Murphy of the online accountants taxback.com, said that in previous years the penalty regime for late filing was relatively benign because of the £100 limit and added: “This gave no incentive for taxpayers to file if they thought they had no further tax to pay. That’s one reason almost a million taxpayers file their returns late each year.
“The new penalty regime however is considerably more aggressive and penalties could very quickly run into the thousands with further penalties such as interest and surcharges on top.”
Mike Warburton of Grant Thornton agreed: “This change will come as a shock to many taxpayers who have so far been able to avoid late filing penalties simply by ensuring that they did not owe any tax by the January 31 deadline.
“The problem is that HMRC are tasked by the Government to achieve filing targets for tax returns which they had been missing . They were finding that they had little effective sanction on those who knew that there was no tax due could avoid a fine by paying what was due.”
Despite HMRC’s making millions of errors in its own calculations of tax due, its new get-tough approach to late tax returns with a £10 per day tariff plus £300 ‘reminder penalties’ at three monthly intervals could turn into a nice little earner for the Treasury. You have been warned."
Cripes!
oyster said:
Hang on, so currently you cannot be fined if you have actually paid the tax on time but haven't done the return?
I paid my tax for 09/10 before 31st Jan this year but have since received 2x£100 penalties for a late return (which I still haven't done).
so if your return hasn,t been done . Then how do you no how much tax you have to pay . un less you over pay just to keep them off your back I paid my tax for 09/10 before 31st Jan this year but have since received 2x£100 penalties for a late return (which I still haven't done).
Its not worth arguing with them either, I had a zero value asset claim with them, they accepted it and agreed it was correct in writing, they paid the money back, then a few weeks later their compliance people contacted me, said it was wrong and fined me the lot. It appears the revenue can do what whatever they want, Accountants are going to court.
Adrian W said:
Its not worth arguing with them either, I had a zero value asset claim with them, they accepted it and agreed it was correct in writing, they paid the money back, then a few weeks later their compliance people contacted me, said it was wrong and fined me the lot. It appears the revenue can do what whatever they want, Accountants are going to court.
they certainly can . an company i do work for was inspected and off the top of there head waked him with a tax bill of 25k .He argued with them but to no avail. he paid its under the understanding that he new it was wrong and he would get his money back .hmrs replied saying he payed the bill to easy and worked another estimated tax bill out at 155k . sent him bust . he had to sell his house to pay it . it went to court after 3 years of fighting .The hmrs agreed that it was all a mistake . so he expected his money back . a little man from the hmrs came out in court to justify the tax investigation. and the court went on the way of the hmrc and he lost all the money. even though they addmited it was all a mistakehollydog said:
so if your return hasn,t been done . Then how do you no how much tax you have to pay . un less you over pay just to keep them off your back
You keep a monthly record of income, expenditure, and monthly notional tax and NIC.I produced a little spreadsheet for myself years ago that gives me a fairly accrate record (+/- 5%) of the amount I owe the barstewards at the end of each month.
Send me a fiver through Paypal and I'll send you a copy
hollydog said:
oyster said:
Hang on, so currently you cannot be fined if you have actually paid the tax on time but haven't done the return?
I paid my tax for 09/10 before 31st Jan this year but have since received 2x£100 penalties for a late return (which I still haven't done).
so if your return hasn,t been done . Then how do you no how much tax you have to pay . un less you over pay just to keep them off your back I paid my tax for 09/10 before 31st Jan this year but have since received 2x£100 penalties for a late return (which I still haven't done).
rs1952 said:
hollydog said:
so if your return hasn,t been done . Then how do you no how much tax you have to pay . un less you over pay just to keep them off your back
You keep a monthly record of income, expenditure, and monthly notional tax and NIC.I produced a little spreadsheet for myself years ago that gives me a fairly accrate record (+/- 5%) of the amount I owe the barstewards at the end of each month.
Send me a fiver through Paypal and I'll send you a copy
Typically people will have no tax liability because they are paying tax at source (as on paye or bank interest) or their payments on account are greater than or equal to their actual tax liability for the year.
I don't actually have that much sympathy for those who incur fines. After all you have 10 months to submit the return and if you are not capable of preparing a return you can always pay an accountant to prepare one for you.
I don't actually have that much sympathy for those who incur fines. After all you have 10 months to submit the return and if you are not capable of preparing a return you can always pay an accountant to prepare one for you.
JagLover said:
Typically people will have no tax liability because they are paying tax at source (as on paye or bank interest) or their payments on account are greater than or equal to their actual tax liability for the year.
I don't actually have that much sympathy for those who incur fines. After all you have 10 months to submit the return and if you are not capable of preparing a return you can always pay an accountant to prepare one for you.
+1 Plenty of time to sort it. I get mine done ASAP so the payment on account is accurate.I don't actually have that much sympathy for those who incur fines. After all you have 10 months to submit the return and if you are not capable of preparing a return you can always pay an accountant to prepare one for you.
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This legislation was originally anounced back in 2008 and was expected to be in place for the 2008/09 tax returns. As it was, the first return where the new penalty rules apply is the 2009/10 return, which should have been filed by 31 January 2011. If you have not yet filed a 2009/10 return and you should have, you are in line for big penalties now.
Late filing penalties were always due EXCEPT that no fine was levied if the tax due at 31 January was Nil. That tax liability criteria has been abolished and you will now be fined whether you owed tax, did not owe tax or were indeed due a tax refund.
If it's any consolation, non tax liability related late filing penalties have been in place for Employers' annual PAYE returns and Corporation Tax returns for years.
All they have done is bring the Self Assessment late filing rules more into line with rules that already exist for other types of tax returns.
Late filing penalties were always due EXCEPT that no fine was levied if the tax due at 31 January was Nil. That tax liability criteria has been abolished and you will now be fined whether you owed tax, did not owe tax or were indeed due a tax refund.
If it's any consolation, non tax liability related late filing penalties have been in place for Employers' annual PAYE returns and Corporation Tax returns for years.
All they have done is bring the Self Assessment late filing rules more into line with rules that already exist for other types of tax returns.
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