HMRC is upping the ante against late tax returns by increasing penalties for returns due for the tax year 2010-11. Crunch MD Darren Fell believes it is a cynical revenue-raiser which he describes as “obscene”.
The penalties apply to returns for the tax year 2010-11, the deadlines for which are October 31st for old-fashioned paper returns and January 31st (2012) for online returns.
The new penalties are as follows:
– An automatic £100 penalty as soon as a return is late.
– £10 a day for returns that are more than three months late, running for a maximum of 90 days.
– Penalties of 5% of the tax due for the return period or £300 (whichever is greater) for failure to pay after six months and again at 12 months.
– A higher penalty of 70% will be charged if a return has not been submitted for more than twelve months and information has been information has been deliberately withheld for HMRC to properly assess the tax owed.
– This penalty increases to 100 per cent if HMRC deems that any freelancer, contractor or small business has purposefully hidden information from them.
It definitely seems as though the taxman is increasingly targeting small businesses to bring in more tax revenues, recently announcing a crackdown on small business bookkeeping. Crunch MD Darren Fell is not best pleased with this approach.
“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,” he said.
“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.”