Whilst many businesses and individuals in the UK hire accountants and tax specialists to help them file their tax returns, a growing number of the population relies on self assessment. Unfortunately, many people are late for one reason or another which leaves them open to penalties.
Beginning this year those penalties will be much tougher than ever before and anyone who files late will subject themselves to hefty fines. There was a time when it didn’t matter when consumers and businesses filed their self assessments as long as their taxes were current, but those days are long gone.
Some tax managers at tax preparation companies note that in previous years penalties were fairly lenient. Since this did not incentivize taxpayers to file and/or pay on time, government instituted changes which should motivate more people.
New fines are for self assessment returns for the years 2011/2012 and the initial fine will be £100 which is going to be charged for filing late even if money is not owed. There is a ceiling set at £900 during a three month period in which £10 is charged per day during nonpayment. After this there will be a another penalty if 6 months have elapsed which is the greater of 5% of tax due or an additional £300. This is due after 12 months.
What many people find alarming is that if you are severely late, after one year, you could be charged as much as 100% of taxes due. This may seem fairly harsh but those who do not owe taxes will not owe some of the fines simply because they are considered to be low income. The whole purpose of penalties and fines is to give taxpayers motivation to file timely.