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NEWS: 2010 Budget Report and Late Filing of Returns and Payments to the HMRC

Added: 30/06/2010

2010 Budget Report and Late Filing of Returns and Payments to the HMRC.

A number of changes are to be introduced by the HM Revenue & Customs regarding their powers of investigation and collection of revenue. The changes relate to the modernising of information and inspection powers and will become effective in April 2012. We are aware from our own experiences however that the HM Revenue & Customs Investigation Department are taking a much more active role where companies have entered into a mode of insolvency and where it is thought that the directors have utilised the Crown as the "bank". There has been a large increase in the number of directors being disqualified and this is against a backdrop of declining insolvencies over the last 12 months.

The last few years has seen an increase in the requirement of companies to file returns on time if they did not wish to face a late penalty.

Budget measures announced in this year's budget are designed to complete the reform of the late submission and non payment of returns. The measures announced in the budget will be as follows:

Penalties for late filing returns (quarterly)

A £100 penalty is immediately after the due date for filing (whether or not the tax has been paid);

The failure also starts a penalty period, which is set for a year;

If there are further failures within the penalty period, then the fixed penalty escalates by £100 for each of those subsequent failures, up to a maximum of £400 per failure.

The penalty period is also extended to the first anniversary of the latest failure;

If any of the failures are prolonged, then additional penalties of 5 per cent of the tax on the relevant return are charged at six and 12 months from the date of the failure; and

If, by failing to make the return, the taxpayer is deliberately withholding information to prevent HM Revenue & Customs from correctly assessing the liability to tax, then penalties of up to 100 per cent of the tax on the return may be chargeable.

Penalties for late filing returns (monthly)

This is a very similar structure to the quarterly model above, except that the fixed penalties are £100 for the first six failures in any penalty period, and then £200 for any subsequent failures.

Penalties for late payments (quarterly)

Where a tax payer first pays late, although there is no penalty, it does start a penalty period, which is set for a period of a year;

If there are further failures within that period will attract a penalty of 2 per cent of the unpaid tax, as well as extending the penalty period to the first anniversary of the latest failure;

A third failure within the period will attract a penalty of 3 per cent with further failures attracting a maximum of 4 per cent; and

If any of the failures are prolonged, then additional penalties of 5 per cent of the unpaid tax are charged at 6 and 12 months from the date of the failure.

Penalties for late payments (monthly)

This is a very similar structure to the quarterly model above, except that, after the first failure, the tax-geared penalties are 1 per cent for the next 3 failures in any penalty period, 2 per cent for the next 3 failures, etc. up to a maximum of 4 per cent per failure.'

Budget Report 2010 Late Filing of Company Returns & Payments – Fines & Penalties. Monthly & Quarterly Payments & Returns – New Penalties & Fines.

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