HMRC issued £187 million in fines and interest charges to taxpayers for the late payment of taxes in the past year, says specialists in tax and accountancy software at Thomson Reuters.
A total of 540,000 late payment penalties were issued to taxpayers last year as huge numbers of self-assessment taxpayers missed payment deadlines.
With the cost-of-living crisis and rising interest rates, it is likely that many individuals and small business owners will struggle to make payments of tax owed, not to mention penalties and interest on top of this.
HMRC recently increased interest rates on late payments to 7% – up from 3.25% one year ago, which is expected to further increase the cost of late tax payments.
Simon Brookings, General Manager, Tax & Accounting Professionals at Thomson Reuters says people who are struggling to pay their taxes on time should contact HMRC as soon as possible in order to negotiate a Time to Pay arrangement. This would enable them to agree paying unpaid tax in instalments.
Simon Brookings says: “Taxpayers who have fallen behind in payments need to be speaking to HMRC sooner rather than later. The longer they leave it the higher the penalties they will have to pay.”
“Self-assessment taxpayers should be consulting accountants to help them budget for the year ahead. They can use expert tax software to simplify the calculation process making it less likely that they’ll fall behind on payments and incur hefty fines.”
HMRC was provided substantial additional funds at the last Budget to help pursue late tax payments. HMRC statistics show that there is currently £40.3 billion in overdue tax that it is owed.
Technology, such as Thomson Reuters’ Digita Personal Tax software, can simplify the process of calculating self-assessment taxes. Digita is an integrated tax and accounting solution which automates compliance tasks, reducing the risk of errors.
