The burden of late filling

Have you filed your tax return yet? It’s that time of year again, the radio adverts have started, the reminders are falling through your letter boxes and even the occasional television advert can be seen. All them with one key message, don’t forget to submit your self assessment tax return, by the 31st January.

But what if you do forget about it and miss that all important deadline of the 31st January. Well you could be facing a fine of £100 on the very next day like 730,000 people did on the 1st February 2013.

Could these fines have been avoided with the help of an accountant?

This expert guide will talk you through the different fines you could face, and how you can avoid them. It has been provided by expert accountants, Easy Accountancy, the UK’s leading nationwide, low-cost, friendly accountants, who are part of the SJD Group of financial companies.   

Tax Returns

You are given two deadlines for your tax return, the first one is midnight on the 31st October, which is if you chose to submit your tax return by paper and 31st of January for an online submission. If you miss the paper deadline you can still submit your return online by the 31st January to avoid any penalties.

There are some exceptions to the deadline such as; if you owe less than £3,000 and want HM Revue and Customs (HMRC) to try and collect the tax through your PAYE tax code the date is the 30th December. Or if you are written to by HMRC with another date.

Completing your tax return can seem a daunting task but with the help of an accountant it will be a very straight forward process, you will just need to supply them with your bank statements for the year so they can calculate how much income you have received and your expenses for the year. From this they can work out how much profit you have made and how much tax you owe. If you’re doing a tax return for extra income, i.e. you’re not self employed but perhaps a landlord. Your tax will be worked out simply by your extra income and a copy of your P60, which shows how much tax you have already paid.

This tax will then need paying in two halves the first instalment by the 31st January and the second by the 31st July. You can pay this online with your credit or debit card, using a giro slip or the simplest way is to set up a direct debt.

As we mentioned previously as soon as you are a day late with your submission by an even an hour you will occur a £100 fine, expect if you have exceptional circumstances such as a failure in the HRMC’s computer system or a serious illness.

Otherwise as long as you then submit it on the 1st February the fines will stop there. Though the longer you leave it the larger the fine will become. For example if you submit it up to three months late you’ll pay a fine of £10 a day up to the value of £900, if your over six months in addition to any penalties you have received before you will face an additional £300 fine or five per cent of the tax due. This fine is then doubled at the 12 month period too. So potentially you could face a fine of a minimum of £1,600 if your 12 months late on submitting your tax return.

Similarly to if you submit your tax return late, if you pay your tax late you will face a penalty. If you pay it within 30 days of your tax being late the fine is five per cent of the tax you owe. An additional five per cent will be added to this fine at months six and twelve, if you still have not paid your tax.

It’s not just your tax return that can occur a penalty, HMRC will fine you for being late with anything. Whether it’s a VAT return or your corporation tax payment, unfortunately if you miss that all important deadline you are going to pay for it, quite literally. But don’t worry if you hire a good qualified accountant they will keep you on top of your deadlines and ensure you’re always on time.

VAT Returns

For instance if you are registered for VAT, you will need to submit VAT return every quarter and then you have one calendar month and seven days to pay it. If you’re late on submitting it you will receive a £100 fine, and then at months six and twelve either a penalty of five per cent of the VAT owed or £300 whichever is the higher.

Late payments are a little more complex, they work on a 12 month period, which starts when the first payment is late. Then until your next VAT return is due you receive no fine, but if there is unpaid tax at this point, a two per cent charge will be occurred, this increases to five per cent if there is unpaid tax at the point your third VAT return is due, ten per cent when your fourth VAT return is due and 15 per cent when your fifth VAT return is due.

Submission of your accounts and annual returns to Companies House

Submission of your accounts and your annual return to Companies House, is a very straight forward matter and so are the fines. Your accountant will prepare your annual accounts from your bank statements, expenses and bookkeeping from the past financial year. They will also prepare a set of abbreviated accounts for Companies House, these will need submitting any time up to nine months after your year end date. Your year end date is 12 months after your company incorporation date, for example if your company was formed on 1st January 2012 your year end date will always be the 1st January.

Similarly, your annual return will need submitting to Companies House within nine months of the year end date. This includes a snapshot of; your company’s directors, secretary (where one has been appointed), registered office address, shareholders and share capital.  This is something your accountant can help you put together, it’s very straight forward.

If you’re late for either submissions of your accounts or your annual return the fines are same. If you pay in your 10th month after your end year end, so you’re a month late with payment the fine is £150. This then increases to £375 if you are up to three months late, then increases to £750 between three and six months late, any time after the six months, it will increase to £1500. Both these fines are separate so if you were to be six months late on submission of your accounts and annual returns, you will be issued with a fine of £3,000.

Corporation Tax

Each year your limited company will pay corporation tax. In a nutshell, this is roughly 20 per cent (2013) of your company’s profit (income minus expenses). Confusingly this needs paying within 9 months and 1 day after your year end, but the figure of corporation tax and a full set of your accounts are due within 12 months of your year end. Technically this means you could pay your corporation tax before telling HMRC how much you are due to pay.  Most accountants, will submit your annual tax return in month seven or eight after your year end when you pay your corporation tax, to save confusion.

If you are late paying your corporation tax, you will face an additional fee of three per cent when you do pay it. If you’re annual corporation tax return is late in the first three months you will be issued with a £100 fine and after three months an additional £100 fine. The fine remains at £200, unless you haven’t paid all of your corporation tax. If you haven’t paid it all in month 18 you’ll get charged 10% of any unpaid corporation.

Choosing an accountant

All these fines can be easily avoided if you appoint a good qualified accountant, but what do you need to look out for in choosing the right accountant for you.

  • Are they a specialist? – You could be forgiven for thinking all accountants are the same, but this isn’t the case. Each accountant has their own area of specialism, just like a lawyer. If you are a sole trader, it’s best to find an accountant to mainly deals with sole traders - they’ll be able to offer you the best way to handle your accounts.
  • The personal touch – Do you have one point of contact or many? It can be understandably frustrating not having your own dedicated accountant and having to repeat yourself each time you ring up to speak to your accountant. Tax is complicated, just dealing with expenses can be a minefield, HMRCs explanatory booklet is more than 100 pages long, and that’s just a drop in the ocean when you consider all the other laws and loopholes that go with the entire corporation tax system.
  • Can you call and email them for no extra charge? Most accountants charge you for the time spent talking to you, whether it’s over email or telephone. This isn’t ideal when you have a problem with your taxes or a really important question to ask your accountant. The last thing you want to be doing is thinking how long you’re talking for. It can be enough to put any business owner off calling their accountant and make them push their tax issues to the bottom of the to-do list.
Of course, ignoring financial issues is never the best move, money is the lifeblood of any business so it’s vital to keep your accounts in order and stay on top of things throughout the year, finding out how you can be more tax efficient, make savings and avoid unexpected bills landing through your letterbox.

Why Easy Accountancy?

All clients receive their own dedicated accountant who they can speak to as often as they want without any additional charges. We never want our clients to be nervous or put off contacting us and potentially losing out on valuable tax saving advice, which is especially important for start-ups and companies pushing hard to grow their businesses.

Our clients find it refreshing that they can call up, speak to their accountant and receive immediate answers to their questions.

As standard, all our accountancy services include:

  • Unlimited telephone and email access to your accountant
  • Advice throughout the year on how to manage your business
  • Ongoing proactive tax advice
  • Help dealing with Inland Revenue
  • Free bookkeeping software
  • Updates and reminders of important accounting dates.
As a freelancer or sole trader our fees start at just £30 + VAT per month, which in addition to the above also includes:
  • Completion of your Self-Assessment Tax Return
  • Advice on Income Tax payments
  • Guidance on National Insurance contributions and PAYE
If you run a limited company, fees start from only £90 + VAT per month. All limited company packages are bespoke to your needs, for a personalised quote please call 0500 234 111 or 01442 275 767, email This email address is being protected from spambots. You need JavaScript enabled to view it. or click Ask us a Question. Typically you’ll receive the above, plus:
  • Your year end accounts completed*
  • Your annual return completed and submitted to companies house
  • Payroll bureau
  • Calculations of your dividends and corporation tax
  • Self-Assessment tax return for the director/s
If you would like arrange a free telephone consultation with one of our friendly accountants or appoint us immediately, please call us on 0500 234111 / 01442 275767 or email This email address is being protected from spambots. You need JavaScript enabled to view it..

 

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