BEWARE OF THE TAX MAN

4/12/2009

Those of you who attended our annual seminars earlier this year will recall we highlighted how HMRC are becoming increasingly aggressive in their attitude to tax compliance and mistakes in tax calculations. We would like to bring to your attention the range of penalties for late returns and late payment of taxes that have been announced. 

For return periods from 1st April 2009 in respect of filings due from 1st April 2010, there is one penalty system for all taxes. Automatic penalties will occur for inaccurate or late returns and late payments of all taxes with the exception of tax credits.  HMRC cannot alter the penalties, which means it is important to always file in good time or agree a timetable for payment which may help to suspend penalty charges. 

The following automatic penalties will apply for filing returns late:

  • One hundred pounds for a missed deadline (even if tax has already been paid)
  • Ten pounds a day for a maximum of 90 days
  • 5% of tax for delays more than 6 months and up to 12 months
  • 70% of tax after 12 months, and if a taxpayer has deliberately withheld information required to asses the amount of tax due
  • 100% of tax if failure to pay is deliberate or concealed

The following automatic penalties will apply for late payments:

  • 5% of tax unpaid at the filing date of corporation tax or Inheritance Tax
  • 5% of tax unpaid from 1 month after payment due date for all other taxes up to 12 months

As well as the penalties, interest always accrues on the unpaid tax and cannot be suspended.  There are also additional rules and penalties for the late submission of CIS returns and PAYE returns although no set penalties have yet been announced.

The new regime is scary enough for all of us in our own tax affairs and it does reinforce the need to seek professional help for your Probate clients. As well as trying to avoid penalties, our dedicated tax team seeks effective ways of saving tax for the estate. In most cases, we sign the tax return and assume responsibility for any penalties. 

Please call us on 0800 496 9000 or 01225 750 261 or email us to discuss how we can help you.