Back Taxes: Filing Late Tax Returns

A  record 9.45 million Self Assessment tax returns were filed on time this year, and a record 7.65 million (80.9 per cent of them were filed online, as per HM Revenue & Customs (HMRC).This means that for the first time in seven years 90.4 per cent of taxpayers met the deadline – an increase of four per cent (700,000 returns) on last year. In fact, it’s the highest on-time filing result since HMRC was created.

Although the 31 January deadline was unchanged, HMRC announced that no penalties would be issued for online returns received by midnight on 2 February, due to industrial action at HMRC contact centres. This year’s record numbers show an increase from last year, when around 6.9 million people had filed online by 31 January. The proportion filing online last year was 78 per cent.

James Cross, General Manager of Taxfile, a South London based Tax Accountant said ‘’our extended opening times and constant reminders to clients about the deadline and penalties resulted in a record number of tax returns filed by us in our 16 years of business!’’

With changes to SA penalties this year, everyone who did not file on time will receive a £100 penalty, which increases through the year.

With the Government keen to raise revenues in order to relieve financial pressures, the focus on tax collection has increased. The total number of returns submitted on time for both online and paper was 9.4 million – breaking 9 million for the first time. The filing deadline has now passed and anyone who hasn’t yet filed their 2010/11 tax return must send it to HMRC as soon as possible, as well as pay any outstanding tax due for the 2010/11 tax year.

If anyone hasn’t filed the return yet please watch for the following dates for the new penalties.

  • an initial £100 fixed penalty, which will now apply even if there is no tax to pay, or if the tax due is paid on time;
  • after 3 months, additional daily penalties of £10 per day, up to a maximum of £900;
  • after 6 months, a further penalty of five per cent of the tax due or £300, whichever is greater; and
  • after 12 months, another five per cent or £300 charge, whichever is greater. In serious cases, the penalty after 12 months can be up to 100 per cent of the tax due.
  • Meaning a maximum penalty of £1,600 could be due.

There are also additional new penalties for paying late of five per cent of the tax unpaid at: 30 days; six months; and 12 months. But James insists there are some positives to doing tax returns as well apart from avoiding penalties. He says: “Working out your tax position each year is a good barometer for the health of your business finances’’.

“We can help by asking the right questions to safeguard our client’s finances and taking the necessary care in the tax handling process.”

**James Cross is the new General Manger of Taxfile (Lambeth’s Best Small Business Award winner 2011) in Thurlow Park Road, Tulse Hill. To find out more please visit www.taxfile.co.uk