HMRC CHANGES TO PENALTIES FOR LATE TAX RETURNS

 

 

HMRC have made many changes of late, the latest being changes to the way they charge penalties for late submission of self-assessment, trust and partnership tax returns.  This came into effect from 6 April 2011 and relates to 2010-11 tax returns and beyond.

 

The new penalties for late filing of self-assessment and trust tax returns are, as follows:

  • Immediate £100 penalty, for filing a tax return after the due date, regardless of whether the tax has been paid or no tax is due.
  • For tax returns that are over 3 months late, the additional penalties are £10 per day, up to 90 days.
  • For tax returns over 6 months late and again at 12 months late, there is an additional penalty of £300 or 5% of any tax due, if greater.
  • In severe cases HMRC reserve the right to charge up to 100% of the tax due.

 

In the case of late submission of partnership tax returns, these deadlines and penalties apply to each partner, within the partnership.

 

In addition to these penalties for late submission, HMRC will also estimate the tax due and therefore charge interest accordingly. The current rate of interest is 3%, which may be subject to change.  The interest will be adjusted once the tax return has been submitted.

 

There have also been changes to the penalties and surcharges for late payment of any tax due. These are as follows:

·         30 days late - 5% penalty of unpaid tax due at that date

·         6 months     - an additional 5% of unpaid tax due at that date

·         12 months   -  an additional 5% of unpaid tax due at that date

 

These changes apply to all tax returns due for 2010-11 onwards. Any tax return still not submitted for any year up to 2009-10 will apply to the old penalty rules, where there was £100 automatic penalty if there was tax due, and interest and surcharges.

 

You have a right to appeal against the penalties if you have a reasonable excuse that will stand up to scrutiny, for missing the deadlines.

 

The current deadline dates for submission of Tax returns are;

  • Paper returns are due at HMRC by 31 October 2011
  • On-line filing due by 31 January 2012

 

For further information go to www.hmrc.gov.uk/sa/deadlines-penalties.htm

 

There is much to HMRC’s legislation and it is advisable you seek the advice of an appropriate qualified accountant. 

 

Please contact:   Dawn Johnson FMAAT (see advert below)

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