Tax returns - new penalty regime

HM Revenue & Customs has introduced a new penalty regime for the late submission of tax returns, to apply from 6 April 2011.

An automatic initial fixed penalty of £100 will arise the day after the filing date.  Previously the penalty would be reduced to nil if there was no tax liability or if the tax due was paid on time, however this no longer applies.

If a tax return is submitted 3 months late there will be an automatic penalty of £10 per day (up to a maximum of £900). If a tax return is 6 months late, the penalty will be either 5% of the tax due or £300, whichever is greater. Where a tax return is still outstanding after 12 months a further penalty of 5% of the tax due or £300 will be charged.

Penalties are also charged on the late payment of tax.  The penalty will be 5% of the unpaid tax at 30 days late, 6 months late and 12 months late. In addition to the penalties, interest will be charged on all outstanding amounts, including unpaid penalties, until payment is received.

The simple way to avoid these penalties is to ensure that your tax return is submitted, and your tax is paid, on time.  For 2010/11 the normal tax return deadline for online filing is 31 January 2012. 

If you would like to discuss this further, please contact you usual Johnston Carmichael contact or a member of the Tax team listed below.

Edinburgh
Claire Maxwell, Tax Manager, 0131 220 2203.