IT Contractor Tax - Accountants for Contractors

HMRC has introduced a new range of penalties for late tax return submissions and payments.

The changes will take effect from this autumn, and will apply for tax returns for the 2010/11 tax year, and beyond.

Self Assessment deadlines unchanged

The self assessment deadlines themselves remain unchanged: you should ensure your paper return has been posted in advance of the 31st October deadline, and online returns must be submitted by 31st January.

The deadline for settling your tax liabilities is also 31st January, irrespective of how you have submitted the actual return.

Late filing penalties

There is an initial fixed £100 for late returns, whether or not any tax is owed on the account.

After 3 months, further daily penalties are applied at £10 per day (to a maximum of £900).

After 6 months, a further penalty is applied - 5% of the tax due, or &300, whichever is the greater.

After 12 months, another 5% / £300 penalty will apply, however the penalty may be increased to 100% of the overdue tax, in serious cases.

Late payment penalties

In addition to the new charges for late filing, there are also penalties for late payment of unpaid tax:

You will be charged 5% of the unpaid tax at 30 days, 6 months, and 12 months.

Naturally, interest will also be charged on top of these penalties.

You can find out more about HMRC's new self assessment penalties here.