Crystal Umbrella

PAYE umbrella contractors are, thankfully, spared the fraught task of calculating their own tax liabilities each year – their umbrella companies perform this for them, leaving them free to get on with their work. However, sole traders and freelancers working through limited companies have to take personal responsibility for their tax affairs and HMRC has just issued a warning that the penalties for late self-assessment returns are about to increase.

The harsher penalties, which kick in from autumn 2011, will affect self-assessment returns from the financial year 2010/11 onwards. The revised fines include a £100 fixed charge for late returns, which self-assessment taxpayers will be clobbered with even if they pay any due tax on time or have no tax to pay at all. There will also be a £10 daily fine for the first three months of late filing, up to a maximum of £900, and an additional penalty of 5% of the tax due (or £300, depending on which is greater) after six months. For those reckless (or desperate) enough to stretch late filing to 12 months or more, the penalty rises to 100% of tax due.

That’s not all. These penalties refer to late filing, not to late payment. As you might expect, parting with your money late will also be punished more harshly. Penalties will now be 5% of the unpaid total at 30 days, 6 and 12 months. Of course, interest will also be charged in addition to the penalties.

For those affected, the deadlines remain unchanged – 31^st October for paper returns and 31^st January for online returns.

Tags: HMRC

This entry was posted on Wednesday, September 14th, 2011 at 11:57 am and is filed under Crystal Umbrella. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.