Time to tot up the tax return
HM Revenue & Customs is reducing penalties for people who come clean on their tax returns. So if you haven’t sent off your historic tax returns, now’s the time to do it. Have you ever missed the deadline?
HMRC has been sending letters to more than 7,000 taxpayers who have missed a tax return submission for the 2009/10 tax year.
Filling out your self-assessment tax return isn’t often seen as the most thrilling part of the year. Totting up your earnings and outgoings can be a cumbersome process, and you could certainly be forgiven for making an oversight on your returns.
But over the past few months, HMRC has taken a far more bullish approach towards those who deliberately avoid paying tax by not declaring their income. David Gauke, exchequer secretary to the Treasury, recently described the practice of paying cash to a tradesman to receive a discount as ‘morally wrong’.
The penalties for failing to declare earnings can be severe. Missing the self-assessment tax return deadline incurs an automatic £100 fine, while an extra £10 a day is charged after three months’ delay. If you’re six months late, there’s an additional £300 fine or 5% of the tax due, so the fine can be the same as the tax you owe.
HMRC’s tax penalty amnesties
To encourage people to pay up, HMRC has run a number of tax penalty ‘amnesties’. The most recent is aimed at people who pay tax at 40% or over, but is also open to anyone who has failed to submit a self assessment tax return from the 2009/10 tax year. You will have until the beginning of next month to confess all and receive a reduced fine.
If you meet the deadline it’s likely you’ll be charged the outstanding tax, interest, and a fine of around 10-20% of the tax owed. But if you fail to submit outstanding tax returns before 2 October, you could face a penalty of 100% of the tax as well as a criminal investigation.
Before this, plumbers, electricians and private tutors have all been given deadlines to come clean.
Time to check your tax position
The ‘new start’ approach has enjoyed considerable success – £510m has been raised from voluntary disclosures and £120m from chasing up people who have yet to comply with the rules. Now is the time to check your tax position carefully, as failure to declare could put you in an unwelcome spotlight.
Even if you’ve missed an amnesty deadline, HMRC still encourages non-payers to get in touch – fines will be lower and the penalties less draconian than they would be otherwise.
If you’ve got away with telling half-truths about your earnings or filing your tax returns late in the past, now’s the time to change your habits.
Do you struggle to get your tax returns in on time? Have you ever missed the deadline?
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