Press Releases

March 2011

New penalties for late filing and payment

South-West chartered accountants Milsted Langdon are warning that new penalties are due to be introduced for late filing and late payment of tax under legislation included in the Finance Act 2009.

HM Revenue and Customs (HMRC) has just published a draft order which will bring in the new filing penalties for Income Tax Self-Assessment (ITSA) from 6 April this year, applicable to returns and payments due for the tax year 2010/11 onwards.

Simon Denton, a partner at Milsted Langdon, said: “Under the new regime, the penalty for late filing of personal and trust returns will no longer be capped at whichever is lower out of £100 or the tax outstanding on 31 January.

“The penalties will now consist of an immediate £100 charge, plus a penalty of £10 per day for returns that are more than three months late, up to a maximum of 90 days. For prolonged failures of over six months, and again at 12 months, there will be an additional penalty of five per cent of the tax due or £300 (whichever is greater).

“A penalty of 70 per cent of the tax due will apply where a person fails to submit a return for 12 months or more and has deliberately withheld information to prevent HMRC from assessing the tax due, rising to 100 per cent if the behaviour is ‘deliberate with concealment’.”

For late payment of tax, the penalty will now be five per cent of the amount of tax unpaid, with a further five per cent if it remains unpaid at six and 12 months. Penalties will be suspended if the taxpayer agrees to a Time to Pay arrangement with HMRC.

For more information call 0117 945 2500.