Tax experts have issued a warning to all small businesses, whether sole traders or partnerships, to prepare early for the Self Assessment filing deadline. January 31st is a key date for businesses in the UK, as it signals the deadline for a Self Assessment tax return to be submitted to HM Revenue & Customs.
HMRC has amended the penalty regime, with new penalties chargeable from 6th April 2011. Businesses which are just one day later than the deadline, even if nil tax is chargeable, will face a fixed penalty of £100. Advice issued by experts includes the noting of all key tax dates throughout the year, including all deadlines.
Book keeping is a large problem for a number of small businesses, especially as keeping adequate and timely records of all business transactions is a legal requirement. According to a recent report by Intuit, more than 20 percent of businesses still keep paper versions of accounting. Not keeping adequate business records during the year has resulted in 31 percent of start-ups in the UK making errors with HMRC. Data also shows that 10 percent of businesses which are less than five years old have run out of cash due to poor book keeping skills.
Missing the deadline will result in a fixed £100 penalty. If you are three months later than the filing date, you will be charged £10 a day up to a maximum of £900. The penalties increase until you may be asked to pay a penalty of 100 percent of the tax due plus all previous penalties in addition to the original amount of tax owing.
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