Penalties introduced in previous years focussed on late filing and late payment of tax, with some taxpayers fined £1,000 or more for late tax returns. Penalties for late filing are charged even where no tax is owed or a repayment is due, so the message again this year is to make sure that your tax return is submitted on time. Where a payment of tax is due, filing before the end of the calendar year allows that tax (provided it is no more than £3,000) to be collected through your PAYE code in the following tax year. This represents an interest free loan for 14 months – worth being aware of!
There are also significant penalties for late payment of PAYE monthly by employers, and businesses and individuals alike need to be aware that with the austerity drive comes a new determination by HMRC to collect tax as quickly as possible.
If you think you will have trouble meeting a tax liability as it falls due, it is always better to contact HMRC to establish whether they will allow ‘time to pay’. Reaching an agreement would eliminate the penalties for late payment, provided you comply with the payment arrangements. Remember that interest is always added to late paid tax. Unlike penalties, you cannot appeal against an interest charge.