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Landlords who fail to submit their tax returns on time can expect no mercy from HM Revenue and Customs after changes in the law let the tax man levy more fines.
HMRC will turn the financial screws on tax payers filing after the midnight deadline on January 31 – and then some as other new rules mean fines for errors and omissions.
Anyone filing a late tax return faces an automatic £100 fine unless they can show ‘reasonable excuse,’ which covers tax payers struggling to deal with day-to-day activities while coping with serious illness or bereavement.
Fines then double at regular intervals, while any late payment of tax attracts interest.
Last January, HMRC garnered £20.8 million in late filing penalties. This year, the take is expected to quadruple to around £90 million.
HMRC explains the ‘carrot and stick’ approach is aimed at urging tax payers to file on time and is not a money raising exercise for the tax man.
Self assessment tax returns must be filed with a full payment of any tax due by midnight on January 31, 2012.
Most accountants will already have a flood of work to meet the deadline, and many are unlikely to guarantee completing and filing the work by the deadline.
The tax professionals do have a work around to limit tax penalties for late returns.
Tax rules say returns can be amended without penalty for 12 months after January 31.
Many tax firms will file a return, explaining full figures are not available but will be filed by a given date, while estimating the tax due for the client to pay on January 31.
This limits the penalty damage as the tax return is filed on time and little or no interest is due as the tax payment has been made. The amended return is filed in due course without further penalty.
If the tax payment is too much, the excess will be refunded with interest.
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