Tax Return Penalties Increased
Small business owners across the UK will have received their notice to file a tax return this April and, whilst the filing process may have become second nature for some, HM Revenue & Custom’s (HMRC) new penalties should encourage taxpayers to tread carefully this year for fear of facing a potential penalty of £1,600. 
Tax returns for the 2010-11 tax period must be filed either by paper tax return by 31st October 2011 or online by 31st January 2012.
Previously, failing to adhere to the deadlines led to a £100 penalty. However, under the new rules not only will you receive an automatic £100 penalty, you will also be required to pay £10 per day (up to £900) if the return is more than 3 months late. Should your return be more than six months late you will receive an additional penalty calculated as the higher of £300 or 5% of the tax due and this penalty is repeated once the return is 12 months late.
You could also be at risk of being fined if you think that you have tax to pay but have not received a notice to file and do not contact HMRC by 5th October 2011.
HMRC’s spokesman Stephen Banyard commented “HMRC spends a lot of time pursuing late returns and getting involved in unnecessary appeals work. We want to focus our resources on more productive work such as catching criminals and collecting tax".
“The old £100 penalty was not much of a deterrent and these new penalties, which increase over time, will get people to submit returns as soon as possible. Basically the greater the delay, the greater the penalty.”
To assist taxpayers in keeping to the various fixed and variable deadline dates HMRC released their tax deadline calendar as part of their wider commitment to transparency.
However, having been tasked with increasing tax revenue HMRC’s tougher stance on tax evasion remains evident. HMRC are increasing the number of tax investigations carried out in addition to the new penalty changes introduced on 6th April 2011.
Considering filing your Self Assessment Tax Return early? Submitting your return early does not mean that you will also have to pay the tax due early. The deadline for payment remains the 31st January 2012 regardless of when your return is submitted, provided you meet either the paper or online filing deadline.
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