When HMRC released information about the Tax Gap last week, experts started to give a lot of tax advice - all for good reason. The difference between the tax HMRC should have received and the actual amount received is a staggering £35 billion. That's from 2009 to 2010. Since 2004, the difference has reached £195 billion.
This is a ridiculously high amount, which is why it's important more than ever to get tax advice from experts, prepare filing for taxes, and actually pay them.
Tax Inspectors Instead of Tax Advice - The Government's Solution
This announcement was conveniently released while the Liberal Democrat annual conference was going on. So, during the conference, the government decided to recruit 2,250 more people to catch people committing tax avoidance to minimize the gap. The government is also set to crack down on wealthy people who deliberately avoid paying taxes.
Last year, the government gave the HMRC £917 million to lessen the tax gap.
What Happens If Someone Fails to Pay?
Strict rules have been implemented because of these new updates. The deadline for online returns is January 31st; while for paper returns, it is October 31st. Anyone late with filing will pay a fine of £100, whether filing via paperwork or online.
If it's past three months and taxes haven't been filed yet, there will be an additional £10 fine on top of the £100. The fine can even reach the maximum of £900.
Six-month delays will have a much bigger fine of £300. Or it may be 5% of the total tax due.
For returns filed more than 12 months late, another £300 will be charged. If things are more serious, taxpayers can even be fined 100% of the tax.
If you do the math, someone who submits returns 12 months late may be fined £1,600.
There are more risks involved with taxpaying now. Taxpayers who don't want to end up at the wrong end of the penalty must not forget to avoid paying. It's sad to think about having to lose as much as £1,600 simply because you weren't able to pay your taxes.
Tax Advice Should be Priority
Other solutions to close this gap presented themselves as HMRC made this announcement. Upon closer inspection of the figures included in the report, one will actually find that out of the total tax money lost only £2.5 billion (7.2%) was because of tax avoidance. What's more, a greater percentage (£11.7 billion or 33.4%) was because of incorrect tax returns, and £11.4 billion (32.5%) was due to unpaid VAT.
With that said, other than having tax inspectors, this tax gap can be reduced much easier if the government would spend money to:
1. Recover the VAT lost
2. Create accountancy courses that teach people and businesses how to fill out tax forms
These two areas make up two-thirds of the lost revenue, so it only makes sense to give them just as much attention.
For those who want to have professionals take care of filing for them, there are tax advice companies that can do just that.
For professional tax advice for your company accounts on filing of tax returns visit our website at http://www.haysdentraining.co.uk/.
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