Daily Penalties hitting many tax payers

HMRC warned us on 19 April that it intends to start charging daily penalties from 1 May 2012 where a 2010/11 tax return is still outstanding.  The new penalty regime allows HMRC to charge:

  • An initial penalty of £100
  • After three months it can charge daily penalties of £10 per day for up to 90 days
  • After six months either a penalty of 5% of the tax due or £300, whatever is the greater; and
  • After twelve months, either a further 5% of the tax due or £300-, whichever is the greater

The key difference to previous years is that these penalties (which add up to an eye-watering £1600)  apply whether or not there is a tax liability, and will ‘stick’ even if a return is eventually filed showing no tax liability or a refund.  If you have not yet filed your 2010/11 tax return you should contact us as soon as possible.