Articles
NEW HMRC PENALTIES FOR LATE TAX RETURNS
A new penalty regime covering the late filing of Self Assessment Tax Returns, and the late payment of tax, came into effect on 6 April 2011.
Since the introduction of Self Assessment in 1996 the penalty for the late submission of a Return has been fixed at £100. This was reduced to nil where no tax liability arose for the year in question, or if the tax was paid by the due date.
These penalties will now increase considerably, summarised below:-
- If a Return is one day late a penalty of £100 will be levied, even if no tax is due.
- For Returns filed three months late, an additional automatic penalty of £10 per day, up to a maximum of £900, will be charged.
- For Returns filed six months late, further penalties in addition to the above amounts will be charged, being the greater of £300 and 5% of the tax due for the year.
- For Returns filed twelve months late, yet further penalties, again being the greater of £300 and 5% of the tax due for the year, will be levied. However, in serious cases a penalty up to 100% of the tax liability may be charged.
In addition to all of the above, further penalties will be charged for the late payment of tax, details as follows:-
- Thirty days late - 5% of the tax unpaid at that date.
- Six months late - a further 5% of the tax that is still unpaid.
- Twelve months late – a further 5% of the tax that is still unpaid.
Last but not least, HMRC will continue to charge interest, currently at a rate of 3%, on all outstanding amounts, including unpaid penalties.
It will be appreciated that total payments to HMRC might be significantly increased by these new rules, and therefore moving forward it will be more important than ever to ensure that all obligations under the Self Assessment system are met on time. At Saffron we are vastly experienced in all aspects of personal taxation, so please do get in touch with your usual contact, or via info@saffrontax.com, if you would like to discuss your tax position.
April 2011