Late payment penalties

Meades & Company would like to highlight some key changes concerning the penalties that will be charged if either your 2010/11 tax return is filed late or your tax is paid late.

These are:

Removal of the penalty ‘cap’. In short this means that the full penalty of £100 will always be due if your return is filed late, even if there is no tax outstanding
Additional penalties for late filed returns, despite no tax outstanding
New late payment penalty surcharges if tax is paid late

Removal of cap

HMRC will still charge a penalty of £100 if your return is filed late, however the appeal route will still be available if you have a reasonable excuse.

But, previously the amount of this penalty has been ‘capped’ for some taxpayers. This basically meant that the penalty could not be more than the unpaid tax at 31 January following the end of the tax year. This capping did not apply to late partnership returns.

This will now be removed therefore the full penalty of £100 will always be due if your return is filed late even if there is no tax outstanding.

Additional penalties

For late file returns, this will be charged as follows;

Over 3 months late – a £10 daily penalty up to a maximum of £900
Over 6 months late – an additional £300 or 5% of the tax due if higher
Over 12 months late – a further £300 or a further 5% of the tax due if higher. In particularly serious cases there is a penalty of up to 100% of the tax due.

Late payment of tax

New late payment penalties will be introduced which are similar to the previous penalties (surcharges) which mean that from 31 January 2012 HMRC may charge the following penalties if tax is paid late:

A 5% penalty if the tax due on 31 January 2012 is not paid within 30 days (the ‘penalty date’ is the day following);
A further 5% penalty if the tax due on 31 January 2012 is not paid within 5 months after the penalty date;
Additionally, there will be a third 5% penalty if the tax due on 31 January 2012 is not paid within 11 months after the penalty date.

These penalties are additional to the interest that is charged on all outstanding amounts, including unpaid penalties, until payment is received.

So, those of you who are Meades & Company clients, help us to help you by sending us all the information that we request as soon as possible so we can complete your tax return efficiently, advise you on your tax position and most importantly prevent you from receiving any penalties! If you are not yet one of our clients, we would be more than happy to discuss these changes with you nevertheless, should you have any queries. Call us today on 01923 900444

Remember: Generally if filing by paper the deadline is 31 October 2011 and if filing online the deadline is 31 January 2012.