Tax penalties apply despite NatWest problems

Revenue & Customs says it will be sympathetic to firms which submit PAYE tax money late because of the RBS debacle - yet they'll still have to pay any penalties due.


Is that being sympathetic?


Here's what the tax people at HMRC say:
"We are sympathetic to any customer experiencing genuine difficulties in not being able to pay their tax bill, but for customers affected by the specific NatWest/Royal Bank of Scotland Group issue they need, in the first instance, to seek compensation or help from the bank."


Apparently, being "sympathetic" means understanding what the reason is and not pestering or pressuring businesses to pay up.


What happens is that firms can be late with one monthly or quarterly payment, then penalties start at 1% of the amount due, rising if they are late again.

1 million tax penalties

One million taxpayers face a penalty of £100 for failing to submit their self-assessment tax returns on time.

But the figure is the lowest since they were allowed to file online, comparing to 1.4m last year and 1.6m the year before.

The tax office, HMRC, allowed an extra two days' grace beyond the 31st January deadline because of a strike, but the 1 million had still failed to file by midnight last night.

They will have to pay the £100 fine whether or not they have additional tax to pay unless they have a reasonable excuse, such as a serious illness, a bereavement or a loss of documents because of theft, fire or flood.

After three months additional fines of £10 a day will start to accrue.

Self-assessment tax forms have to be filled in by people with more complicated tax affairs - for instance the self-employed or those with a high income from savings. The latest forms were for the tax year which ended in April, 2011.

A record  9.45m forms arrived by last night and 7.65m were submitted online - another record.

Tax shock for plumbers

Tax officials are putting the frighteners on 50,000 plumbers, gas fitters and heating engineers.

They're being sent letters encouraging them to take advantage of an amnesty to pay tax on any income they may have neglected to mention.

Last year, the officials managed to prod 2,000 doctors and dentists into coughing up millions of pounds in unpaid tax.

One doctor admitted to owing £1m.

How could he owe so much? It was from private healthcare work, I understand, and the sum accumulated over a number of years.

And there would have been a penalty to include in the total of around 20% of the amount owed, under the amnesty.

It's the penalty which is the real clincher. After a full investigation Her Majesty's Revenue & Customs could have resorted to a 100% penalty and prosecution.

I am told that 70% would have been more likely in the doctor's case, so owning up would have saved him hundreds of thousands.

It seems unlikely that HMRC will extract so much from plumbers. In fact they have no idea how much they'll get.

The beauty of the amnesty tactic is that you just announce it, send out the letters and wait for the offenders to name themselves.

You only have to start working on investigations if you are unhappy with the results.

Who's next? I think solicitors and barristers should watch out.