HRMC Get Tough !

Today is the start of the 2011/12 tax year and with it has come a raft of newly-announced regulations from HMRC which take effect from today.

We are highlighting two:

Firstly the nominal £100 for filing your self assessment tax return late has been overhauled with the announcement of a new more onerous penalty regime where you submit your tax return late and pay your tax late.  The details are as follows:

All of the penalties shown in the table below will be charged even if you have no tax to pay or have paid the tax you owe.

 

Penalties for sending your tax return late
Length of delay	Penalty you will be asked to pay
One day	Initial £100
Three months	£10 each day – up to a maximum of £900
Six months	£300 or 5% of the tax due, whichever is the higher
Twelve months	£300 or 5% of the tax due, whichever is the higher.  In serious cases you may be asked to pay up to 100% of the tax due instead.

 

E.g. if you send your tax return back six months late, you’ll be asked to pay the first three penalties shown in the table below.

The deadlines and penalties above also apply to each partner in a partnership.

Penalties for paying late
Length of delay	Penalty you will be asked to pay
Thirty days	5% of the tax unpaid at that date
Six months	A further 5% of the tax unpaid at that date
Twelve months	A further 5% of the tax unpaid at that date

 

And secondly the introduction of more severe penalties, of up to 200%, for those people who do not declare offshore income or gains. The weighting of the penalty is dependent on the location of the undisclosed source. Each territory has been placed into one of three categories. The list of territories is on the HMRC website here:

http://www.hmrc.gov.uk/news/territories-category.htm

There will be three new levels of penalty:

• Category 1 territories: the penalty rate is the same as for existing penalties, up to 100 per cent of the tax due.

 

• Category 2 territories: the penalty is 1.5 times the existing penalties, up to 150 per cent of tax due.

 

• Category 3 territories: the penalty is double the existing penalties, up to 200 per cent of tax due.

 

Interestingly if the territory is not specifically named in Categories 1 or 3 it will, by default, fall into Category 2.