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ICAS warning on fines for late returns

ICAS (Institute of Chartered Accountants of Scotland) is warning that up to a million taxpayers could be caught by new penalties for late tax returns, and says HMRC has not done enough to publicise the changes.

From the end of October, anyone who is even one day late in filing their paper self-assessment tax form will be hit with an instant ?100 fine. After another three months an additional fine of ?10 a day is added for each day overdue, up to a maximum of ?900. Tougher fines are added if passing the six month or one year mark which equate to the larger of ?300 or 5% of the tax due.

From the 31 January next year the same rules will apply to those who file their form online. ICAS calculates that from this point a return due by the end of January 2012 but not filed until 5 August 2012 would attract ?1,300 or higher in fines.

Derek Allen, director of tax at ICAS, said: ?We are concerned that most people will not yet be aware of these new penalties as they have not been widely communicated. Based on the last decade of experience, at least 1m people could find themselves liable to the additional penalties.?

ICAS also warns that some taxpayers could end up losing out on tax rebates from HMRC. It says this is particularly relevant for those self- employed in the construction sector, where tax is often deducted initially by the contractors. Individuals are then due repayments after calculation once they lodge a return. However, under the new rules, if the return is late the repayment owed will be a lot less because it has been used by penalties.

This article is sourced from Accountancy Magazine.

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