Self Assessment Tax – new regime significantly increases penalties for late filing

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For the tax year 2011/12 there is a new penalty regime for late filing of tax returns and the late payment of tax.  Under the new regime penalties for filing a tax return six months late could exceed £1,300.

The new penalties – late returns

HM Revenue &Customs (“HMRC”) considered that the old penalty of £100 did not act as a deterrent for late filing of tax returns.  The new penalties for late filing of tax returns are as follows:

• A £100 penalty will be imposed from the day after the deadline.  This will be imposed even where the tax is already paid or there is no tax to pay
• A daily penalty of £10 up to a maximum of £900 where the return is greater than 3 months late.
• Additional penalties of the greater of 5% of the tax due or £300 where the return is over 6 months late.
• Further penalties of the greater of 5% of the tax due or £300 where the return is over 12 months late.
• In serious cases penalties of up to 100% of the tax due may be applied.

The new penalties – late filing

Penalties for paying your tax late are as follows:

• 5% of the unpaid tax if 30 days late.
• A further 5% of the unpaid tax if 6 months late.
• A further 5% of unpaid tax if 12 months late.

For further information or to discuss the issues raised, please contact Guy Abbiss, Stephen Wright or Bina Gayadien  on +44 20 3051 5711