HMRC to penalise late-filing contractors

Contractors are being urged to avoid an instant late-filing penalty ahead of the January 31 deadline for online self-assessment, even though more and more HMRC customers have made their return already – on Christmas Day.

In a reminder to the 10 million or so covered by self-assessment, an accountancy body warned taxpayers to make sure their returns are filed with Revenue & Customs by this month’s end - or face a £100 fine even if no tax is due.

“At a time when money is tight,” said the body, the Association of Chartered Certified Accountants, “the last thing [that] you need is to pay for something that could be easily avoided.”

But at a time when millions traditionally exchange presents, feast on turkey and nod off in front of the TV, 1,548 Britons this year chose December 25th as the opportunity to complete their return (for 2011-12).

That represents a 40 per cent increase on Christmas Day 2011, when 1,100 people filed online, indicating that the tougher penalty regime, or perhaps the desire for “inner peace” – the taxman’s latest moniker to entice people to file early, is having an impact.

However that still leaves two million people who missed last January’s deadline, of whom 850,000 are being issued HMRC letters this month warning of a £1,300 penalty (or more) because their returns remain outstanding.

“Be sure to file your 2010/11 return electronically before 31 January 2013 to avoid the penalty increasing from £1,300 to £1,600,” advises Richard Mannion, national tax director at Smith & Williamson.

He added: “If you are missing some details of income you should make your best estimate and explain this in the additional information box.”

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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