Penalties may be charged for late filing of documents, late payment and a variety of other scenarios. For instance, HMRC may charge someone a penalty for not getting in touch about new income that is liable to tax.
Some understanding in this area can help companies avoid penalties, which can place extra stress on already stretched resources.
Late payment and filing
You can be charged a penalty if you fail to submit documents before a designated deadline, or fail to pay your tax bill in a timely manner. The penalty may be as much as the tax bill itself, so it can soon place a burden on finances. Although it can be difficult to run a company while dealing with administration, missing relevant deadlines will cost a lot more in the long term. If lack of time is a problem for you, consider outsourcing finance and accounting to a professional so that all your tax affairs and business records are up to date. Although it may seem as though you are taking on extra costs, outsourcing costs far less than penalties and has a number of other benefits to help the business.
Making errors
Anyone can make errors, especially if you have very little time or don’t possess the relevant skills to complete a task. VAT, PAYE and keeping business records can be complex, and making a mistake can result in the wrong amount of tax being paid to HMRC. You could be fined for not taking ‘reasonable care’ or deliberately including false information. To ensure errors are not made, you could consider outsourcing as a solution. Maintaining your business records will help in avoiding errors. Although this requires a disciplined approach to bookkeeping and other tasks, spending a little time each day on routine tasks could avoid having to spend days trying to make sense of paperwork.
Keeping HMRC informed
Tell HMRC of any changes to your business that may have an effect on future liability. Failure to notify HMRC will result in a hefty penalty charge. If you aren’t sure which changes need to be notified to HMRC, you may want to seek advice from a professional. Some common changes which can affect liability are failing to notify HMRC when your turnover reaches the threshold for VAT and making capital gains by selling assets. Make sure that you are aware of current thresholds for various types of tax so that you can remain compliant.
If you would like to know more about avoiding penalties, contact us today.