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Late filing contractors face harsh penalties from April 6th

Posted Mar 21, 2011

New financial penalties are to be imposed on individuals who file their personal tax returns late after April 6th 2011. One contractor accountant has criticised the move by HMRC, preferring to see a more educational approach.

New tax return penalties from April 2011

The new regime, the legislation for which was included in Finance Act 2009, consists of a number of penalties:

  • A £100 penalty immediately after the due date for filing has past.

  • Daily penalties of £10 for returns that are three months late (running for a maximum 90 days).

  • Penalties of 5% of the tax due for the return period (or £300 if greater) for prolonged failures of over 6months, and again at 12 months.

  • There will be a higher penalty of 70% of the due tax if an individual fails to submit a return for over 12 months, and has deliberately withheld information needed for HMRC to assess the tax owed.

  • This becomes a maximum 100% penalty if HMRC deems any delays to have been deliberate, with concealment.

There are also new penalties applied to the late payment of the actual tax liabilities.

A more educational approach is needed

Commenting on the introduction of the new penalties regime, Darren Fell, MD of online accountants Crunch, said:

"David Cameron recently spoke about how entrepreneurs would lead the economic recovery but we fail to see how these harsh new penalties will help people who work for themselves.

"We understand that public finances are stretched at the moment, but is there any evidence to suggest that hiking the penalties will encourage more people to hit the deadline? We believe a more educational approach is needed to ensure returns are completed correctly. Also, online services should be vastly improved to help complete and submit the returns easily and quickly."

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