Taxpayers could find themselves paying a high price for submitting late tax returns under a new penalty regime introduced in April.
From 6 April 2011, anyone submitting a self assessment return a day late will receive a £100 penalty and for a delay of three months, will have to pay additional penalties on top of that, at a rate of £10 a day and up to a maximum of £900.
If the delay reaches six months, the taxpayer will be asked to pay a further £300 or five per cent of the tax due, whichever of the two is the higher.
After 12 months, another £300 or five per cent of tax due penalty will be levied again, although the cost could go up to 100 per cent of the tax due in serious cases.
HM Revenue & Customs (HMRC) says all the penalties will apply, even if the taxpayer has no tax to pay or pays all the tax they owe, although it will waive penalties if they have a reasonable excuse for missing the deadline, such as a life-threatening illness, the death of a partner or documents being lost through theft, fire or flood that cannot be replaced in time.
Penalties will also be charged on late payments. After 30 days, the penalty is five per cent of unpaid tax at that date, with the same penalties levied after six months and 12 months. Interest will also be levied on all outstanding amounts, including any unpaid penalties, until all payments are made.