January 20, 2009Late filing could net taxman £479m

Penalties for late filing of returns, miscalculations and fines from previous years will see the taxman rake in almost £500m

A study has shown that taxpayers are set to stump up £479m for messing up their online tax returns.

The fines will be generated by people filing returns after the 31 January deadline, miscalculations and surcharges on unpaid tax from previous years according to research by Unbiased.co.uk.

This amount has increased by £26m on forecasts for 2008.

This year it is predicted £102m will be raised from people from late filing, £315m in fines for miscalculations made on tax forms and £62m in add-ons for unpaid tax from previous years.

Failure to get forms to HMRevenue & Customs will incur a £100 charge, with an additional £60 a day charge.

If the return is still overdue in July, a supplementary penalty of £100 will be added additional to the daily charges.

David Elms, chief executive of unbiased.co.uk, said, 'The penalties for those who return their self-assessment forms late or incorrectly remain unforgiving, so now is the time to take tax action.'

'Missing the HMRC’s deadlines inevitably results in hefty fines, and in the current climate more than ever we would urge consumers to avoid this by ensuring that their forms arrive on time and in order.'

In 2007, it was estimated that over 1 million self-assessment forms were filed late. Of these, the vast majority incurred a penalty of £100, and many more were subject to further surcharges, the study said.

This represented an increase of 16% on 2006, which showed consumers were still 'failing to take action and reduce the amount of tax they pay,' the study added.

Story from: Accountancy Age

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January 9, 2009More time to pay

You won’t need reminding that 31 January is the biggest tax payment date for individuals. As 31 January 2009 falls on a Saturday the funds must reach HMRC by Friday 30 January 2009 to avoid interest charges.

Taxpayers who will not be able to pay the full amount due by the end of January need to take action sooner rather than later.

The best thing to do is for them to call the HMRC Business Payment Support Service on 0845 302 1435.

The Business Payment Support Service will give a business more time to pay if they can be convinced that the business is viable, and it will be able to pay all of its tax debts in the longer term. You need to factor in the interest charged on late paid tax, but HMRC will not charge a late payment surcharge if the tax is paid according to the payment plan.

Where HMRC agrees to a payment plan for the business they will insist on a direct debit being set up to make regular tax payments.

Construction industry
Clients in the construction industry may be concerned that if they agree further time to pay their tax debts their gross payment status will be withdrawn. This should not happen if the tax payments are paid as agreed in the plan but the HMRC computer may spew out a warning letter about gross payment status automatically. If this happens, you need to contact HMRC and point out that an agreed time to pay arrangement is in place. The subcontractor’s gross payment status then should not be withdrawn unless there are other tax compliance failures.

VAT debts
These can also be covered by the time to pay arrangements, and if the payment plan dates are met the late paid VAT will not be treated as a default. Normally when a business is late with its VAT payments or return, the VAT office automatically issues a surcharge liability notice. This is a warning that if another VAT payment or return is late within the next 12 months a surcharge will be imposed at 2%of the VAT due. The next late payment also extends the surcharge liability period for another 12 months. Repeated late payments increase the level of the surcharge each time they occur.

Where time to pay VAT is agreed with HMRC in advance the VAT surcharge liability system should not be triggered, as long as the actual VAT return is received on time, and the VAT is paid according to the agreed plan.

HMRC Business Payment Support Service

Missing VAT payments

Story from:
www.TaxAdviceNetwork.co.uk