There are a number of new penalty regimes coming into force, and for business owners and private taxpayers alike the new message from the tax authority is, ‘Take care to avoid a penalty.’ While penalties for inaccurate returns started in 2009, the regime is extended in 2010 to all taxes and duties, and some other tax obligations such as registration for VAT. The new regime is designed so that taxpayers who take reasonable care over their affairs – keeping records and providing their adviser with all information relevant to their tax position in a timely manner – will never be penalised for an understatement on their return. However, those taxpayers who are careless can expect more significant penalties in future, with a penalty of 30% for careless errors and much higher levels for deliberately mis-stating income. Even where penalties might apply, however, taxpayers are encouraged to come forward and disclose understatements on returns, with significant discounts for disclosing omissions – leading to a reduction to nil for careless mistakes.
In 2010 there will be new penalties for late returns and late payment of tax, and the practice of capping a penalty at the tax outstanding whereby those with little or no tax to pay can file late with impunity will end. Now is a good time to get your tax affairs right up to date. Of particular importance is the need to pay PAYE and NIC liabilities on time each month or quarter, as there will be a new penalty for those who pay late. As late payment of PAYE has not previously carried an interest charge, many employers may have become used to “letting slip” their payment dates for this liability. It is essential that from May 2010 all payments are made by 19th of the month for payment by cheque, and 22nd for those paying electronically. You may need to think carefully about your business funding if you have normally taken advantage of the relaxed regime currently in place.
Tags: HMRC, tax relief, UK Corporation Tax, UK VAT
