Business Owners Face Increased Late-payment Penalties
Business owners and the self-employed will face an increased penalty if they fail to file their paper-based tax returns before the 31 October deadline, HM Revenue & Customs (HMRC) has warned.
Under the new penalty system, businesses which file their self-assessment tax return after the deadline will now face a £100 fixed fine, even if no tax is due.
After three months, outstanding tax returns will incur fines of £10 a day and for delays of more than six months, a further fine of £300 or 5 per cent of the total tax owed will be issued, whichever is the greater.
Fines would also be issued for late payment, HMRC said. Penalties will be charged at 5 per cent of the outstanding amount of tax at 30 days, followed by an additional 5 per cent at three months, then one year. Interest will be charged on top of fines.
An HMRC spokesman said the new, stiffer penalties had been introduced because the old fines had not been enough of a deterrent.
“These new penalties, which increase over time, will encourage people to submit returns as soon as possible,” he said. “We are forced to spend a lot of time chasing up late returns and late payment and the new system aims to reduce that.”
However, the tax body said that firms with a “reasonable excuse” for missing the self-assessment deadline would not have to pay a penalty.
“There may have been an exceptional or unexpected event, beyond your control, that meant you couldn’t send your return on time ― such as a life threatening illness or documents lost through fire,” said the spokesman. “In all cases, you should get in touch with HMRC as soon as possible.”
The tax return deadlines remain unchanged — 31 October for paper and 31 January for online returns. The deadline for paying any tax due also remains the same at 31 January.