Tax – it’s no laughing matter. Avoid penalties!

Forrester Boyd News, Small Companies, Tax
Tax penalties

As we enter a new tax year it is worth remembering that your self assessment tax returns for the year ended 5th April must be submitted by 31st January next year to avoid penalties.  And if your return is significantly late these penalties can be severe: £100 fixed penalty initially, followed by £10 per day after 3 months up to a maximum of £900.  If your return is 6 months late there is a further penalty charged at 5% of the tax due, with another 5% charge after 12 months.

If, as is likely, there is also unpaid tax then late payment penalties of 5% of the tax due are payable after 30 days, 6 months and 12 months.  Of course the best way to avoid all of these penalties is to get your tax return completed and submitted in plenty of time and make sure you set enough aside to settle your tax bill.

Every year significant numbers of tax payers ignore this common sense advice and suffer the financial cost.  Given the amounts that can become due it is no great surprise that many tax payers appeal on the grounds of “reasonable excuse”.  However what may come as a surprise is what many of them appear to consider reasonable.

A year ago I highlighted a number of such excuses and stated that as far as I knew nobody had actually tried the old schoolboy excuse of “my dog ate it”.  I’m delighted to say that I have now come across “My dog ate my tax return … and all of the reminders”!  This tax payer was clearly barking up the wrong tree and the tax man, after some paws for thought, decided that this excuse was not reasonable.

Aside from this classic, albeit slightly clichéd attempt there have been enough gems over the years to justify (to me at least) the compilation of a top 10 list of excuses that have been put forward over the years:

10. After seeing a volcanic eruption on the news, I couldn’t concentrate on anything else

9. My bad back means I can’t go upstairs.  That’s where my tax return is

8. I spilt coffee on it

7. My wife helps me with my tax return, but she had a headache for 10 days

6. I’ve been far too busy touring the country with my one man play

5. My pet goldfish died

4. I couldn’t file my return on time as my wife has been seeing aliens and won’t let me enter the house

3. My tax return was on my yacht … which caught fire

2. My business doesn’t really do anything (this from a firm of financial advisers!)

1. I’ve been too busy submitting my clients’ tax returns (and this one from an accountant in London!)

In case you were wondering, all of these excuses were deemed unreasonable.  Don’t become part of next year’s top 10 and get your tax return information submitted as early as possible.