Many freelancers will have heard of the £100.00 penalty for late filing of their tax return; however this penalty has always been capped so if you filed your return late but had a tax liability of only £50.00 then your penalty could only be £50.00. HMRC are removing this cap so all late returns will receive an automatic £100.00 penalty.

They have also stated that for prolonged late returns the fines will increase in the following way:

A daily penalty of £10.00 for returns which are over three months late – this can run for a maximum of 90 days.

An additional £300.00 – or five per cent of the tax due if this is higher – for returns over six months late.

A further £300.00 – or a further five per cent of the tax due if this is higher – for returns over twelve months late.

A higher penalty of 70% will be charged if a return has not been submitted for more than twelve months and information has been deliberately withheld which HMRC requires to properly assess the tax owed.

This penalty increases to 100 per cent of your tax liability if HMRC deems that information has been deliberately concealed from them.

The Self-Assessment deadlines are 31 October 2011 for all paper returns and the 31 January 2012 for all online returns.

However do not leave it till the last minute to send your income information through to us - we can file your return today and you still won't have to pay your tax liability until 31 January 2012 - no reason to put it off.

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