Self – employed tax payments – Payments on account

It is important to keep your personal tax affairs in order so that you avoid incurring any Tax Return late filing penalties. The cut-off dates are shown in the calendar, but the current penalties are:

Late filing	Late payment	Penalty
Miss filing deadline		£100
	30 days late	5% of tax due
3 months late		Daily penalty £10 per day for up to 90 days (max £900)
6 months late		5% of tax due or £300, if greater*
	6 months late	5% of tax outstanding at that date
12 months late		5% or £300 if greater*, unless the
		taxpayer is held to be deliberately withholding information that would enable HMRC to assess the tax due.
	12 months late	5% of tax outstanding at that date
12 months & taxpayer deliberately withholds information		Based on behaviour:
		deliberate and concealed withholding 100% of tax due, or £300 if greater.
		deliberate but not concealed 70% of tax due, or £300 if greater.
		Reductions apply for prompted and unprompted disclosures and telling, giving and helping.

 

Case Study: George is self-employed. His accounts are made up to 31 August each year. When we prepare the 2018 Return we will be including his profit for the year ended 31 August 2017, and that is the profit which will be taxed for 2017/18. George’s payments on account for 2018/19 will automatically be based on the 2017/18 liability. Providing we know that George’s profits for the year to 31 August 2018 are significantly less than the previous year, we can examine the figures, perhaps even prepare the annual accounts and, taking into account any other sources of taxable income, make a claim to reduce George’s 2018/19 payments on account, easing his cash flow by reducing the tax payments due in January and July 2019.

Disclaimer:
This guide was written specifically for Smart Accounting clients. Some of the information contained in this guide might not be applicable if you do not have a business managed by Smart Accounting. By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details are correct at time of writing.