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WARNING Tax is taxing, why pay more?

Forward by Mark Bracegirdle FCCA FMAAT – Whilst I’m an accountant, I no longer practise the art but rather I spend my time running Farm and Country Finance which raises finance for anyone in rural life or business. Even though I could do the job, I have no intention of dealing with the tax man (hell no) and I leave this to my own accountant – it’s worth paying a few quid to avoid the hassle. The amount of red tape now engulfs all small businesses. most of it coming from HM Government and it is the same government that is now making hay from additional penalties for the late filing of income tax returns and late payments of related tax. Read on to find out how this could affect you, but bear in mind that now is the time to bring your tax affairs up to date and keep them that way, otherwise HMRC would dearly love to extract penalties from you, even though no tax may be due at all. Some of my time is spent raising finance for tax bills and it never ceases to puzzle me when I find out how late returns can be. Keeping your income tax affairs up to date has never been more important.

The changes

With effect from April 2011, HMRC will  penalise you should you file your tax return late or fail to pay any tax due on time .  The further there is delay, the greater the penalties will be. There are two ways in which penalties can be incurred – late filing and late payment.

Late Filing

  • It’s £100 for a day late even where there is no tax due or you’ve already paid it.
  • Get to three months late and you will be charged a daily penalty of £10 per day, with  a maximum of £900.
  • For six months late you will be charged further penalties, i.e. the greater of 5% of  the tax due or £300.
  • Yet more penalties await you should you be twelve months late , which are the greater of 5% of tax due or £300.  In particularly serious cases, you could face a penalty of up to 100% of any tax due.

Paying late

  • For 30 days late the  initial penalty is 5% of the tax unpaid at that date.
  • For 6 months late there is  a further penalty of 5% of the tax left unpaid.
  • For 12  months late the further penalty is  5% of the tax left unpaid.

In addition to the penalties, interest is chargeable on all outstanding amounts, including unpaid penalties, until payment is made in full.

 More information can be found at  www.hmrc.gov.uk/sa/deadlines-penalties.htm 

Conclusions – HM Government takes enough from us all without fattening the coffers with penalties – this is just another form of taxation, though this one has the option of not having to be paid by good attention to paperwork, however tedious this may be.

The moral: file and pay on time and you’ll not pay more than you need to.

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