Larsen & Co


HMRC Late filing and payment penalties

In the past late filing of your tax return resulted in an initial penalty of just £100 which was reduced to £nil if the tax had been paid in full, a second penalty also £100 was incurred if the return was more than 6 months late.
For the 2010/11 tax returns the penalty regime is changing and will become much more severe. A tax return filed six months late could attract a penalty of at least £1,300.

The new penalties for filing your tax return late are:

• Overdue by One day £100, even if you have no tax to pay or you have already paid all the tax you owe
• Overdue by 3 months £10 per day up to a maximum of £900
• Overdue by 6 months Greater of 5% of tax due or £300
• Overdue by 12 months Greater of 5% of tax due or £300. In serious cases you face a higher penalty of up to 100% of the tax due.

The new penalties for paying your tax late are:

• Overdue by 30 days 5% of the unpaid tax at that date
• Overdue by 6 months 5% of the tax that is still unpaid
• Overdue by 12 months 5% of the tax that is still unpaid

These penalties are on top of the interest that HMRC will charge on all outstanding amounts, including unpaid penalties, until your payment is received.
Penalties will be automatically sent to all Self Assessment taxpayers who do not file and pay on time. Taxpayers will be able to appeal against any penalty on the grounds that they have a reasonable excuse for not complying on time. All penalty notices will include an appeal form and details on how to appeal.


Workplace pensions reforms

From October 2012 new work-based pensions reforms are being phased in to encourage more people to save for their retirement.

Under the reform there will be a requirement for employers to auto-enrol jobholders in pension schemes. Where there is no existing provision, employers will either need to set up a suitable “qualifying scheme” or contribute to NEST (National Employment Savings Trust).

The responsibility for enrolling new employees and paying over contributions falls on the employer.

Employers already providing pension schemes will need to ensure they are qualifying schemes.

Once an employer is required to join the scheme they will need to:
• Provide a qualifying scheme (including NEST)
• Automatically enrol all eligible jobholders
• Provide information to staff, including telling them they are being automatically enrolled and can opt out if they want to
• Pay minimum contributions as below
• Register with the pensions regulator
• Maintain adequate records
• Repeat the auto enrolment process every 3 years for jobholders who have opted out.

Employer contributions will be at least;
1% from start
2% from October 2016
3% from October 2017
Employee’s contributions will also be phased in to reach 4% by October 2017.
There will also be an additional tax relief of 1% to make the total minimum contribution 8%.

An eligible job holder is a worker (employee’s, but also includes other people) earning above a certain amount and aged between 22 and state pension age.

Contributions will be based on qualifying earnings, currently between £5,175 to £38,185 and this will change annually.

A 3 month waiting period can be imposed to ease administrative burdens on companies with high staff turnover, and allow time to align with pay periods.

To find out your start date please consult this table