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Question
I have not yet filed my tax return for 2010/11 as due to cash flow problems I will be unable to pay the tax bill that will become due by 31 January 2012. What should I do? Will I have to pay penalties? Answer. If you do not file your tax return you will automatically be charged £100 penalty on 1st February 2012. If you still have not filed your return before 30 April 2012 you may be charged £10 per day for up to 90 days. After this 90 day period if the return is still outstanding you will be charged the greater of 5% of the tax due or £300.
If the return is still not submitted by 31 January 2013 a further penalty is charged of the greater of 5% of the tax due or £300. If HMRC believe you are deliberately withholding information they can issue penalties of up to 100% of your tax due. To avoid these penalties you should submit the return before 31 January 2012 even if you cannot make payment. HMRC will charge interest on your amount outstanding. The rate of interest charged by HMRC is currently 3% per annum. If your tax bill is still unpaid 30 days after the due date a penalty of 5% of the unpaid tax will be charged. A further 5% penalty will be charged on 31 July 2012 if it is still unpaid. Finally an additional 5% penalty will apply if this is still unpaid by 31 January 2013. It is therefore advisable to pay your balancing payment before 28 February 2012 to avoid these surcharges. You can also contact HMRC and explain your cash flow difficulty. HMRC may in turn enter a time to pay arrangement with you in which you can agree a monthly repayment. The advice in this column is specific to the facts surrounding the questions posed. Neither FPM Accountants LLP nor the contributors accept any liability for any direct or indirect loss arising from any reliance placed on replies.
Email d.hillen@fpmca.com |