 Taxman set to reap £100 million as late filing penalties for tax returns get tougher
13 January 2012: PKF Accountants & business advisers warns individuals who have yet to submit their tax return for 2010/11 that they will be fined £100 for missing the 31 January filing deadline - even if they are actually entitled to a tax refund.
As around 1 million taxpayers fall foul of the deadline each year, HMRC could net £100m from penalties so it may not be too disappointed if your return is late - despite rumours of prize draws for prompt filers in future years.
Andrew Penman, head of London private client services at PKF, says: "HMRC now adopts the sort of approach to tax collection you would expect from a budget airline and charges for everything that is late. It is no longer possible to avoid a late filing penalty simply by paying all the tax that is due for 2010/11 by 31 January and then sending your tax return in later. From this January onwards, the fixed £100 penalty will be charged on filing a late return regardless of the amount of tax under or overpaid."
"The longer you delay, the worse it gets. If the return is not filed before 1 May, HMRC can start to charge penalties at £10 a day (for up to 90 days) and there are yet more penalties for longer delays. Ultimately, if you have been asked to submit a return for 2010/11 and do not do so before 1 February 2013, HMRC will charge penalties totalling £1,600 even if you don’t owe any more tax for the year. If there is tax outstanding in such a situation, you could end up paying twice the amount due because the maximum penalty HMRC can charge is the higher of £1,600 or 100% of the tax due."
Sending in a paper tax return now will trigger the £100 penalty as paper returns should have been filed by 31 October last year. The only way to file now without a penalty is to send the return in online. Andrew Penman says: "Contact a professional adviser today if you can’t face using HMRC’s online system. If you are prepared to do it yourself, you will need to register with HMRC and receive an ‘activation code’ before you can start filling in the form – this can take a week to come through so don’t leave it until the end of January to get started."
It should not be overlooked that 31 January is the deadline for final tax payments for 2010/11 and there are separate penalties for late payment of tax. Andrew Penman says: "As well as charging interest on amounts paid late at a rate of 3%, HMRC also charges a penalty of 5% of the tax outstanding if you do not pay by 1 March. Further delays mean you continue to rack up penalties, which can reach a total of 15% after a year."
"Even if you can’t afford to pay your tax bill by 31 January, there is no point in building up even bigger debts by putting off the submission of your return. The best thing to do is send in a return and call HMRC’s Payment Support Service on 0845 302 1435 to ask about staged payments: you will still have to pay interest but you may be able to avoid the late payment penalties.”"
Ends
For further information, please contact: Andy Konieczko, 020 7065 0537, andrew.konieczko@uk.pkf.com
Notes to Editors:
1. New penalties for late filing of 2010/11 returns
| Date filed | Penalty |
| Paper return | Online return |
| 1 November 2011 – 31 January 2012 | 1 February 2012 – 30 April 2012£100 |
| 1 February 2012 – 30 April 2012 | 1 May 2012 – 31 July 2012£10 per day late, capped at £900 This is in addition to the fixed penalty above. |
| 1 May 2012 – 31 October 2012 | 1 August 2012 – 31 January 2013In addition to the penalties above, the greater of £300 and 5% of tax liability shown on full & complete return. |
| 1 November 2012 onwards | 1 February 2013 onwardsIn addition to the penalties above, the greater of £300 and 70-100% of tax liability shown on full & complete return if information withheld by taxpayer, otherwise 5%. |
Note: the dates referred to above assume that the notice requiring the individual to file a return was issued no later than 31 July (or 31 October if the return is filed online).
2. New penalties for late payment of tax
| Date tax paid | Penalty |
| By 29 February 2012 | No penalty but interest will still be charged from 31 January 2012 on late payment |
| 1 March 2012 – 31 July 2012 | 5% of tax outstanding as at 1 March 2012 |
| 1 August 2012 – 31 January 2013 | Previous penalty plus 5% of tax outstanding as at 1 August 2012 |
| After 1 February 2013 | Previous two penalties plus 5% of tax outstanding as at 1 February 2013 |
3. PKF (UK) LLP is a leading firm of accountants and business advisers with more than 1,500 partners and staff operating in 23 offices in the UK mainland firm, incorporating a wholly-owned financial planning company and associated offshore practices. The firm specialises in advising growing and entrepreneurial/owner-managed businesses, AIM and fully listed companies, and also has extensive experience in the public and not-for-profit sectors. Principal services include assurance and advisory; taxation; consultancy; corporate recovery and insolvency; corporate finance and forensic. The firm has particular expertise in advising sectors such as hotels and leisure; mining and resource; public sector; real estate and construction; professional practices; not-for-profit; and medical. The firm’s web site is www.pkf.co.uk
4. PKF (UK) LLP also offers financial services through its FSA authorised company, PKF Financial Planning Limited. PKF (Isle of Man) LLC is a limited liability company registered in the Isle of Man. PKF (Channel Islands) Limited is incorporated in Guernsey.
5. PKF (UK) LLP is a member firm of the PKF International Limited (PKFI) network of legally independent member firms. The PKFI member firms have around 2,200 partners and more than 21,000 staff in around 125 countries.
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