Content
After U, Gordon?
Ups And Downs
Gift Horse
What A Relief!
Second Thoughts?
Last One Out...
Penalty Shoot-Out
Ain't Necessarily So
Going, Going, Gone
Papers In Order?
Death And Taxes
Passing The Buck
Hire Higher
Back Taxes, Taxes Back
Options Open
Extortion?
Sick Note
Cats And Dogs
Old-Fashioned Money
I Thee Endow?
Mother's Rights
Countdown
Nowhere To Hide
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A few years ago, HM Inland Revenue and HM Customs & Excise were separate organisations. They both wanted your money, but they had very different ways and means of relieving you of it. Since the merger of the departments in 2005, they have been looking at the differences between them and trying to iron some of them out. One of the areas where they are bringing in new rules - to be the same for income tax, corporation tax and VAT, but different from either regime before - is penalties for declaring too little or too late. Of course, you hope never to have to worry about this, but everyone makes mistakes occasionally. A careless mistake can cost up to 30% in a penalty on top - but if you notice it first and put it right without being prompted, this is likely to be waived. You just have to pay the tax and some interest because it's late. The law now tells us what a "careless" mistake is - although some Inspectors of Taxes would say that any mistake is careless, because if you were taking proper care you would get the answer right. It's nice to see the law recognising that it is possible to do your best and make a truly innocent error. A deliberate mistake that you don't try to conceal - some might call that a foolish mistake - gets a 70% penalty, but repenting and telling them about it might cut it to 20%. And a deliberate, concealed understatement of your tax could cost up to 100%. These new penalties apply to chargeable periods which started on or after 1 April 2008, where you have to file a return on or after 1 April 2009. The 2008/09 tax year for individuals, 31 March 2009 accounting periods for companies, and the 31 March 2009 quarter's VAT return will all be covered. For mistakes in earlier periods, the old rules still apply. The rule changes don't affect the penalties and surcharges for paying tax late or filing returns late. They will probably be reviewed at some point, because there are big differences between VAT default surcharges and the income tax and corporation tax rules - it's likely that the two systems will be brought into line eventually. We hope you never have to discuss penalties with HM Revenue & Customs - but if you are aware of making a mistake of whatever kind, putting it right as early as possible will greatly reduce the penalty. We can advise you on how to go about setting the record straight. |
© Bayar Hughes & Co., 2010.