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Penalties for late returns and late payment of tax

Income tax self assessment From 6 April 2011
Standard penalties for filing late:
One day late £100
Three months late £10 per day up to a maximum of £900
Six months late Further penalties calculated on the greater of 5% of tax due on £300

For failure to notify liability or for inaccuracies in a return:

Failure not deliberate: up to 30% of tax

Failure deliberate but not concealed: up to 70% of tax

Failure deliberate and concealed: up to 100% of tax
Standard penalties for paying late:
Thirty days late 5% of the unpaid tax due at that date
Six months late A further 5% penalty of the tax that remains unpaid at the date
Twelve months late A further 5% of the tax that remains unpaid at the date

OTHER PENALTIES:

Failure to keep and retain tax records: up to £3,000 per year of assessment

False statements to reduce interim payments: up to the shortfall of tax

Failure to produce documents or obstructing an inspection: £300 plus daily penalty of £60

The Upper Tribunal may impose a penalty where significant tax is at risk.

Corporation tax self assessment

 2011/12 2010/11
First and second late returns - up to 3 months late £100 £100
Third consecutive late return - up to 3 months late £500 £500
First and second late returns - 3 - 6 months late £200 £200
Third consecutive late return - 3 - 6 months late £1,000 £1,000
Returns more than 6 months late 10% of tax outstanding 10% of tax outstanding
Returns more than 12 months late 20% of tax outstanding 20% of tax outstanding
For failure to notify liability or for inaccuracies in a return:

Failure not deliberate: up to 30% of tax

Failure deliberate but not concealed: up to 70% of tax

Failure deliberate and concealed: up to 100% of tax

OTHER PENALTIES

Failure to keep and retain tax records: up to £3,000 per year of assessment

False statements to reduce interim payments: up to the shortfall of tax

Failure to produce documents or obstructing an inspection: £300 plus daily penalty of £60

PAYE
Year end return (form P35) and related forms   £100 per 50 employees per month (or part)
Form P11D(b) where due   £100 per 50 employees per month (or part)
Forms P11D   £300 per form

 

For 2011/12 end 2012/13

The penalty is based on the number of items the employer has failed to deliver:
Number of items Penalty
1-2 £0
3-49 £100
50-149 £300
150-299 £600
300-399 £900
400-499 £1,200
500-599 £1,500
600-699 £1,800
700-799 £2,100
800-899 £2,400
900-999 £2,700
1,000 or more £3,000

CIS
Monthly return - CIS 300 £100 per 50 subcontractors per month £100 per 50 subcontractors per month
Failure to provide information £3,000  £3,000

VAT : default surcharge periods
First return in surcharge period 2% 2%
Second return in surcharge period 5% 5%
Third return in surcharge period 10% 10%
Fourth and subsequent return in surcharge period 15% 15%

Notes

  1. The fixed penalties for late self assessment returns cannot exceed the tax outstanding on the due date for the return. If all of the tax has been paid the fixed penalty is zero. This does not apply to partnership and trust returns and this 'cap' is due to be withdrawn shortly.
  2. VAT default surcharge also applies when the VAT return has been submitted but the VAT remains unpaid. The penalty is calculated at the rate shown applied to the VAT outstanding. Late repayment returns still register as a default, but no penalty is due.
  3. Penalties at 2% and 5% are not levied if the amount of the penalty does not exceed £400, but the default still registers and increases the potential penalty for the next default.

Late payment penalties

Self Assessment

Penalties of 5% of the tax unpaid are charged one month and six months after the due date for tax payment (31 Jan) on 28 February & 31 July.

VAT

The default surcharge penalty system also applies to late payment of VAT liabilities, even if the return is filed on time.

PAYE, NIC and CIS tax

There is a penalty regime under which late payment of PAYE, NIC and related liabilities during the tax year will attract a penalty. The first late payment in the tax year is not liable to penalties but subsequent late payments attract a penalty base on the total number of late payments in the tax year.

Number of defaults Penalty %
1 0
2,3,4 1%
5,6,7 2%
8,9,10 3%
11 or more 4%

Tax is due by 19th of the following month or 22nd if paid electronically. Small employers may use the quarterly payment scheme.

Limited company accounts – late filing penalties

Penalties for late filing are as follows:

Length of delay, based on the filing date Private company Public company
Not more than one month £150 £750
More than one month but not more than three months £375 £1,500
More than three months but not more than six months £750 £3,000
More than six months £1,500 £7,500

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