A leading Midlands tax advisor has expressed his ‘astonishment’ at the new penalty framework for the late filing of tax returns – a measure introduced on 6th April by HM Revenue & Customs (HMRC).
The criticism of HMRC has come from Steven Holden, Tax & Trust Manager at Midlands-based MFG Solicitors, as thousands of people and small businesses across the Midlands are left seething at potential financial penalties of up to £1,300 – a staggering 650 per cent increase.
Mr Holden said: “Countless people across the Midlands region are this week receiving their 2010/11 self-assessment notices and are rightly stunned to see this draconian penalty framework being sprung on them.
“For example, under the new rules a small Birmingham-based business could be looking at a potential fine of £1,300 if they fail to file their tax return within six months – a monstrous 650 per cent increase. Equally ridiculous is within the new rules even those owing no tax could still face a whopping £1,000 penalty. These harsh charges are far worse than anyone was expecting from the taxman and the icing on the cake will see HMRC now charging interest on top of both the tax owed and the penalty itself.
“Frankly, it’s astonishing this severe framework has been put in place – especially at a time when Midlands firms are still trying to find their way through a delicate economic recovery. The offence of ignoring a tax return can now be a frighteningly expensive mistake.”
Under the old penalty rules for the late filing of tax returns, there was an initial immediate £100 penalty, followed by a further £100 if not filed within six months. If no tax was owed, it would be written off.
Mr Holden, a respected tax expert, added: “HMRC are getting tough and there’s no getting away from the fact that the new rules are here to stay. First and foremost, those due to file their paper tax returns to HMRC by 31st October must not ignore their tax obligations. They need to be more prepared than ever and if required, take professional advice to avoid spinning into the HMRC’s complicated world of fines, penalties and tribunals.
“Spring may have sprung here in the Midlands, but HMRC’s harsh tax penalties have the ability to blow the new leaves from the financial trees of many across the region.”