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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.



Date: 25th November, 2008
Author: Liz Cuthbertson


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