The Institute of Chartered Accountants (ICAEW) has issued a reminder that self-assessment taxpayers, who have not yet paid all the tax due for the 2005-2006 tax year, will incur cumulative penalties the longer payment is delayed.
On the 28 February HMRC will impose a 5% surcharge on all unpaid tax from 2005/06, 28 days after the final deadline of 31st January 2007.
In addition, interest will be payable on the surcharge if it is not paid within 30 days of the date of the notice issued by HMRC. Taxpayers who continue to delay settling their full tax liability will also incur a further surcharge of 5% on any tax still unpaid on 31 July 2007.
These charges, which are potentially expensive for the taxpayer, exist in addition to the interest of 6.25% per annum charged on any unpaid tax, which began to accrue as soon as the January deadline passed.
Taxpayers need to pay overdue taxes and any surcharges as early as possible to avoid spiralling penalty charges.
Anita Monteith, technical manager from the ICAEW Tax Faculty, said:
“Taxpayers need to be aware about the amount of interest, surcharges and penalties that can be imposed by HMRC. Although it is easy to put off paying tax which is owed, the costs can very quickly add up.”
These charges will come as an added blow to those self assessment tax payers who failed to file their self assessment forms before midnight on January 31. The failure to submit the tax return itself carries its own set of penalties.
There is an automatic charge of £100 on any late return and this will be doubled on 31 July if the self-assessment form has still not been submitted to the taxman. For continuing failure to submit the tax return, a daily penalty of £60 can also be levied.