"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."
Millions of taxpayers face the midnight 31 January self-assessment deadline. Missing the filing deadline triggers an immediate £100 penalty. HMRC charges 7.75% interest on late tax payments from 1 February, applied to amounts owed even if the return has been filed. Interest can rapidly exceed the fixed penalty and will accrue during Time to Pay arrangements. HMRC pays only 2.75% interest on tax refunds, less than half the rate charged for late payments. Filing or paying late increases the likelihood of an HMRC compliance check, which can incur substantial costs to resolve, potentially running into tens of thousands of pounds.
Read at London Business News | Londonlovesbusiness.com
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