Under a strict new system, HMRC are issuing tougher penalties that could hit people who fail to submit their tax return on time.
Late tax returns could lead to people facing a fine of up to £1,600, whether or not they have extra tax to pay.
Approximately10 million people in the UK must submit a self-assessment return each year. These include the self-employed, company directors and those with many incomes; however, they could now be hit with the hefty fine if they are late in submitting the return, even though many believe they have no extra tax to submit.
October 31 is the deadline for paper returns, and 31 January is the latest people can submit their tax returns online.
The cost of the fine has accelerated under the new stricter system - filing a late return previously only resulted in a £100 fine.
The new stricter system outlined by HMRC will still see taxpayers receive an initial £100 fine for filing after 31 January, however, if the file is not paid for the next three months an additional £10 per day will be added, up to a maximum of £900.
If the return has still not been filed for a further three to six months, HMRC will issue the taxpayer with a £300 fine or five prevent of the tax that is due – in other words, whichever is higher.
For returns that are not filed between six months and 12 months another £300 fine will be issued or again five percent of the tax owed. In the more serious cases, the taxpayer could potentially be fined 100 percent of the tax owed.
And a taxpayer who has a year-long outstanding tax return could end up being fined for at least £1,600.
Fines were once cancelled if the taxpayer did not owe money to HMRC because there was no extra tax to pay or because it had been paid, however, this is no longer the case with the new system. Taxpayers will still need to pay the fine.
The stricter system will mean that taxpayers need to be extra cautious when filing their tax return and be aware of any possible penalties that could come their way. They could find themselves receiving a significant penalty, even though they believe they have correctly paid all of their tax.
"For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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