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No more Mr Nice Guy

No more Mr Nice Guy

HMRC has already decided that its New Years resolution is to get tough on people who don’t submit their returns on time.

Contractor accountants have little over a month left to file their self-assessment tax return and pay any monies owed to the Revenue. Failure to do so will result in an immediate penalty of £100, even if your tax liability for the year ended 5th April 2011 is zero.

The only exception to this rule is if your Notice to Complete a Tax Return notification from HMRC arrived after 31st October 2011. If that was the case, your filing deadline is three months after receipt of that letter.

In addition to the £100 fixed penalty for late submission, HMRC has introduced a new set of fines to encourage people to file sooner rather than later. If your tax return remains unfiled 90 days after the January deadline, you will be charged £10 for each late day in addition to the £100 fixed penalty. This could add another £900 to your overall tax bill. Additional penalties are levied if the return remains outstanding after six months and 12 months.

Penalties can be cancelled if the Revenue agrees you had a reasonable excuse for late filing. Unfortunately there is no clear definition of what a reasonable excuse is, but the department has provided examples of situations it would accept, such as the taxpayer suffering a life threatening illness, problems with its online filing service or being unable to replace documents lost in fire or flood in time.

Rather than run the risk of accumulated penalties, it would probably be better to file and pay in plenty of time, and the long festive break could be the perfect opportunity!

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Dinosaur Toy Macro by Josh Rokman

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