The Dangerous Side of Self-Assessment
Self-employed? Running your own small business? Then you're very likely to be sorting out your own tax returns which can be a messy job at times and can be a pitfall if you fail to pay your due on time.
Luckily, some individuals have their tax issues sorted by a tax accountant such as Clearsky, but the process of Self-Assessment has been reduced to an online form these days for those that have to do it upon their own accord.
Any delay on filling out this form though and the penalties can be substantial for your earnings, whether you were due to pay any tax or not.
As of May 1 2012 the penalty for a one-day late tax return is a straight up £100 fine and the following shows what happens if the problem develops:
- One day late: An automatic £100 fine and is applied whether any tax is due or not or even if the tax has been paid.
- Three months late: On top of the initial penalty, as soon as the three month bracket comes in a £10 daily fine enters the equation, with a maximum 90-day period and so a potential penalty of a further £900.
- Six months late: Whichever is the higher figure, £300 or 5% of the tax due, will be added as a further fine on top of anything previously.
- Twelve months late: Adding to all the other penalties, the six month fine is repeated - in some cases 100% of the tax due is taken as a fine instead.
There are many companies that can help make sure this never happens and it can be a real godsend knowing your returns are being submitted well on time for the end of the financial year.
It could help further to make sure someone does an IR35 review as well to make sure you're not losing money elsewhere and you could actually save well into the £1000s.
In fact, heaping all of your financial needs onto one company can allow you to concentrate on your own job and there are several services that can help keep all this information in one place, whilst an external accountant takes care of the dirty work of taxation and administrative tasks.
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