Pre-Budget Report 2008 - Penalties for late tax returns
One of the many consultation documents that accompanied today’s Pre Budget report has indicated that HM Revenue & Customs would like to reform the penalty regime for the late submission of Self Assessment tax returns. Currently the £100 fine for filing a tax return late can be mitigated by paying sufficient tax by the due date. HMRC see this regime as largely ineffective.
The Revenue want to separate the obligation to submit a tax return from the obligation to pay the tax. One proposal is that there should be a fixed penalty arising the day after the filing date followed by daily penalties for continued delay (after three months). If the return remains outstanding there would a further penalty linked to the amount of tax due (up to 100%!).
Separately, the Revenue would be able to charge the usual interest for paying the tax late but also penal interest set at a percentage of the tax outstanding one, six and twelve months after the due date.
Expect changes in the 2009 Budget.
