According to data released by HM Revenue & Customs (HMRC), the number of self-assessment customers who failed to submit a tax return before the 31st January deadline – all of whom receive an automated £100 penalty – could be as many as 890,000. While this is far more than last year, it isn’t as high as the number of tax returns missing the deadline in 2010, when 1.6 million were charged an instant penalty.
Although it can be a challenge to get your business records and information ready in time to complete and submit a self-assessment tax return before the deadline, it could save you huge amounts of money.
What are the penalties?
In addition to the initial automated penalty of £100, further penalties are charged if the tax return isn’t submitted to HMRC. Once it is three months late, further penalties are charged of £10 for each day it remains outstanding, up to £900. If you fail to submit the outstanding tax return within the next three months, another charge will be made, either five per cent of the tax due that year or £300, whichever is more. These penalties are applied even if no tax is due. If the tax return hasn’t been submitted within 12 months of the original deadline, the case is viewed as being more serious and HMRC can charge up to 100 per cent of tax due as a penalty. The accumulation of penalties, plus any interest payments, could harm the business.
Managing your business records
With so many demands on your time, it is a common occurrence to leave bookkeeping and the filing of invoices and receipts until the very last minute. Rather than face a struggle that could end up costing the business, maintain orderly records on a regular basis. If this is not possible, consider outsourcing your accounting so that you can be assured all is in control.
Outsource accounting early
If you think you will benefit from professional help with your record keeping and tax returns, look for an accountant during February or March, as this is often a quiet period between the deadline for self assessment and the beginning of the new tax year. In addition to being able to discuss your requirements, a reputable accountant can help with tax planning for the start of the new tax year. Further, professionals will submit your tax return before the self-assessment deadline, potentially saving you thousands of pounds.
If you would like to discuss your options for the new tax year or need help with outstanding tax returns, give us a call today.