As most of you know, 31st January, 2012 is the 2010/11 online deadline for filing individuals’ and partnerships’ tax returns.
The deadline for filing in paper form was 31 October 2011.
The difference in filing deadlines for paper and on-line submissions needs to be considered. As the examples below will show, if you are not one of our clients, it may be better to instruct us to file on-line for you and pay our fees out of the penalty you have saved.
Under the new penalty regime that applies for the first time this year, if a return is filed late the following penalties will be charged:
1 day late A fixed penalty of £100. This applies even if you have no tax to pay or have paid the tax you owe.
3 months late £10 for each following day – up to a 90 day maximum of £900. This is as well as the fixed penalty above.
6 months late: £300 or 5% of the tax due, whichever is the higher. This is as well as the penalties above.
12 months late: £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. These are as well as the penalties above.
Penalties may also be incurred for paying tax late.
Let me give you a few examples of the penalties payable. I am assuming that the taxpayer has no tax to pay:
2010/11 tax return filed on 1st March, 2012 –
£100 penalty if filed online; £390 penalty if filed by paper.
2010/11 tax return filed on 1st May, 2012 –
£110 penalty if filed online; £1,300 penalty if filed by paper.
2010/11 tax return filed on 1st August, 2012 –
£1,300 penalty if filed online; £1,300 penalty if filed by paper.
2010/11 tax return filed on 1st November, 2012 –
£1,300 penalty if filed online; £1,600 penalty if filed by paper.
These examples show that, as a result of the £10 per day penalties, on-line filing penalties start to increase after 1st May, 2012. Anyone filing a paper return after 1st February will incur high late filing penalties.