Ahead of the self-assessment tax return deadline of midnight on 31st January, millions of taxpayers have been warned of the £100 penalty issued by HMRC if they miss the deadline.
However, compliance expert, Qdos, has said the bigger watch out is the interest charged by HMRC on late tax payments – which is currently 7.75%. This interest will be applied from 1st February, impacting anyone who has filed their tax return but not paid the amount owed to HMRC.
CEO of tax insurance provider, Qdos, has issued a caution to self-employed workers, warning, “Being hit with a £100 penalty isn’t ideal at the best of times, but the interest charged by HMRC to those who don’t pay their tax on time is the real kicker – and can cost a lot more than £100 if you’re not careful.
“Currently set at 7.75% of the amount owed from the 1st February, this can mount up quickly – to the point where, before you know it, not paying on time has cost you hundreds. This is the case even if you’ve set up a Time to Pay arrangement with HMRC, which allows you to spread the cost of your tax bill over several months.
“And if you’ve paid too much tax and you’re due a refund? HMRC will only pay 2.75% interest on money it owes to you – less than half of what it charges to those who are late paying their tax bill.
“There’s also the reality that filing or paying late puts you firmly on HMRC’s radar. So, penalties and interests aside, you run the risk of HMRC carrying out a compliance check – something that can cost tens of thousands of pounds to shut down.”
