Friday, 22 July 2011
New penalties for late tax returns
Up to a million taxpayers could be caught by new penalties for late tax returns.
From the end of October, anyone who is even one day late in filing their paper self-assessment tax form will be hit with an instant £100 fine.
After another three months an additional fine of £10 a day is added for each day overdue, up to a maximum of £900.
Tougher fines are added if passing the six month or one year mark which equate to the larger of £300 or 5% of the tax due.
From the 31 January 2012 the same rules will apply to those who file their tax returns online. This means that a tax return due by the end of January 2012 but not filed until 5 August 2012 would attract £1,300 or higher in fines.
Since self-assessment was introduced in 1997, nearly one million people each year have been late in filing their personal tax returns, and many taxpayers delay submitting their return for longer than 12 months. Until now, as long as the person had paid all the tax due no penalty could be charged by HMRC.
Some taxpayers could end up losing out on tax rebates from HMRC. This is particularly relevant for those self- employed in the construction sector, where tax is often deducted initially by the contractors. Individuals are then due repayments after calculation once they submit a return. However, under the new rules, if the return is late the repayment owed will be a lot less because it has been used up by penalties.
Most people will not be aware of these new penalties as they have not been widely communicated by HMRC.