More Penalties!

Prior to 6th April 2011, where a self assessment income tax return was filed late it attracted a £100 fixed penalty. If however any tax due was less than a £100, then the fine was reduced to the amount of tax owing.

That is all about to change from 6th April when an initial £100 penalty will be levied for returns filed late regardless of whether or not any tax is owed. Other changes to the regime are as follows:

Tax return 3 months late:  automatic daily penalty of £10 per day up to a maximum of £900.
Tax return 6 months late:  additional penalties charged at  greater of 5% of tax due or £300.
Tax return 12 months late:  further penalty charged at greater of 5% of tax due or £300. In serious cases, an increased penalty of up to 100% of the tax due could be charged.

A return that is filed six months late could therefore attract a penalty of £1,300.

Late payments

From January 2012 HMRC may charge the following penalties if tax is paid late:

5% penalty if tax due on 31st January is paid more than 30 days later.
A further 5% penalty, if tax due on 31st January is paid more than 6 months later.
An additional 5% penalty if tax due on 31st January is paid more than 12 months later.

The above penalties are in addition to interest charged on tax arrears.

Make sure you file your 2011 self assessment and pay any tax due on time otherwise it could end up being costly.


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