Self Assessment Tax Return Penalties at highest rate ever

Created by Rosie


If you file a Self-Assessment tax return (or your tax agent does it for you), you should be aware that the deadlines are 31st October for paper returns or 31st January for online. At Bettertax, we file all returns online and on time, unless we are claiming tax back from previous years.
However, worrying stats are emerging from HMRC that 1.5m individuals were subject to late filing charges following the 31st January 2011 deadline. 
With 1.5m people having to pay the starting penalty of £100, that’s £150m in the government coffers! Scarily, the penalty system is being changed.  Daily fines after the return is outstanding for 3 months , fines for inaccuracies, carelessness, concealment and other matters, which could mean individuals having to pay anything up to £1500 the tax due. Conversely, HMRC are able to make all these mistakes and seem answerable to no one.
The following are extracts from Accounting Web


Self Assessment
  • Introduction of £100 late filing penalty for those who file a paper SA return late (more details here)
  • Daily penalties of £10 per day for returns that are more than three months late, running for a maximum of 90 days
  • Penalties of 5% of tax due for the return period (or £300 if greater) for prolonged failures (over 6 months and again at 12 months)
  • Elimination of the cap based on tax due; so even if the outstanding amount has been settled by 31 January 2012, a late filing penalty will still apply
  • End of the Steeden v Carver interpretation that allowed returns to be filed without a penalty on 1 February
  • Offshore penalties apply to all tax regimes from 6 April 2011
  • Insufficiency of funds and reliance on a third party will no longer be accepted as a reasonable excuse (Finance Act 2011, Sch 24, part 4)
  • Higher “culpable” penalties: 70% of the tax due where a person fails to submit a return for over 12 months and has deliberately withheld information necessary for HMRC to assess the tax due; 100% penalty if deliberate with concealment (introduced April 2010 and applicable to all tax types - see HMRC elearning pages).
Construction Industry Scheme
The CIS penalty regime is already in force and retains many similar features to Self Assessment and PAYE penalties. But since it was a monthly regime, it started at £100 for the first late month, and then racheted up by £100 each month. In some instances where firms had neglected to register in the first place, they were being hit with notices for £20,000 and more. The highest reported at RebeccaBennyworth’s lectures so far was £80,000 for a firm that had built up over 12 months for a contractor that had failed to register. Thankfully, CIS penalties arising as a result of late registration have been capped at £3,000 from 1 October 2011.


Being registered HMRC tax agents, Bettertax are authorised to file clients’ tax returns online and we ensure that it’s done on time. Too often, tax payers who don’t enlist an agent’s help, find the tax system so overwhelming to deal with, they take on ostrich tendencies hoping the whole thing will disappear. However, HMRC don’t go away and if a self assessment return is ignored, you will be pursued until it is dealt with. 

We're happy to give free tax advice and also offer a "Guaranteed Refund or NO fee", so you have nothing to lose in contacting us for help on your tax situation.


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