Old Mill urges taxpayers to file online or face costly penalties

HM Revenue & Customs is clamping down on late filing of Self Assessment forms and payment of tax, with 8% more taxpayers fined in 2011 than last year.

Rural accountant Old Mill is urging sole traders and businesses to complete their Self Assessment returns online before the 31 January, 2012, deadline. “A recent request through the Freedom of Information Act has confirmed that 1.5m individual taxpayers were issued Self Assessment late filing and late payment penalties in January 2011,” says partner Mike Butler.

“This equates to 15% of the 10m Self Assessment returns issued for the 2009-10 tax year and an increase of 8% on the previous year. With a standard late filing penalty of £100, the sum of 1.5m penalties represents a minimum of £150m income for the Exchequer.”

HMRC has altered the penalty system in recent years, to make it more consistent across all the tax regimes. This means that taxpayers will be charged a penalty for late submission even if they have paid their tax by 31 January, or if no liability is due. It has also introduced daily penalties of £10 a day for returns that are more than three months late, up to a maximum of 90 days; and a minimum £300 penalty, or 5% of tax due, for prolonged failures over six and 12 months.

“With the government still finding it difficult to manage the fiscal deficit, compounded by the significant cuts in the headline Corporation Tax rate, it would appear that HMRC are looking to use the amended penalty regime to supplement income and bolster the income tax take,” says Mr Butler. “I would urge everyone who has failed to meet the paper return deadline of 31 October to file online before 31 January, even if they are not expecting a liability to be due.

If anyone needs any assistance in meeting this deadline please contact your local Old Mill office as soon as possible.