Tax Penalties: What you need to Know?
If you fail to file tax returns or pay tax payments on time, you will be liable to tax penalties. Careless errors, deliberate tax evasion or fraud can also incur you penalties. Apart from these, there are other common causes of tax penalties like failing to register for VAT when your turnover reaches the threshold, and failing to implement HMRC recommendations for improvements.
One of the best ways to stay away from penalties is to have professional tax accountants to deal with your taxes. They will take care of the tax return deadlines, and payments.
Penalties for late payment and late returns
, an initial £100 penalty will be charged for missing the deadline. After three months, additional penalties include £10 per day which can reach up to £900. After 30 days overdue in payment, penalties start from 5%.
Just like self-assessment, an initial of £100 penalty will be charged for late fillings with a further charge after three months for corporation tax.
Late payment or late filing of a tax return counts as a default for VAT
. The more default in 12 month period will also increases the percentage of VAT. Likewise, same system applies with the PAYE in case of late tax payment.
If you encounter any errors in your tax return, revealing them to HMRC is very important. If HMRC believe you, then it may postpone the penalty for up to two years and advise you for improvement. You must also know that tax evasion is counted as crime and you could be prosecuted for it.
You must know penalties are charged on scale based on the amount of lost tax. If you fail to send in tax return, you will be charged up to 30%. If the error was deliberate, you will be charged up to 70% but if the error was intentional and attempt to hide it will further increase the charge up to 100%.
In case if you think your tax penalty is not right, take advice from your accountant
and write to HMRC. Then, you can either ask HMRC officer to review your case or appeal to a tax tribunal. Even though payment of uncertain penalties can be postponed during the review period and appeal, the interest on due amounts will be charged after your case is over.