The end of January was a tough time for over 10 million people - as the deadline for submitting their tax-return (and payment) hit hard after the festive season. For 850,000 of them, it was particularly tough, because they actually missed their deadline for filing the return, and they were immediately hit with a £100 fine.
And from today, if they still haven't filed their return, life is going to get incredibly tricky.
The good news is that by far the majority of people are covered. Some 9.6 million filed on time, and most of the rest slid in just after the deadline (600,000 of them). However, there will still be those who are struggling.
New penaltiesIf you haven't paid up, from 1 May, HMRC will add another £10 a day to what you owe until the day you file. This process will continue until 1 August - by which time you will have racked up a maximum of £1,000 in fines (including the £100 you got for missing the January date).
Even then the pain won't end. If you haven't paid by 1 November, you will have either 5% of what you owe, or £300 added to the total bill - whichever is higher.
If, for example, you owed £10,000 in tax, by this final stage, you would be facing a bill of £12,000 - or £21,500 if you were deemed a serious case.
What can you do?Clearly, if you are having problems completing a tax return, you need to act fast before the penalties get out of hand. If it's a question of struggling with the forms, there's lots of help available, from accountants and HMRC itself either online at www.hmrc.gov.uk, by phone, or at your local Tax Enquiry Centre.
For many people, however, the problem is paying the tax itself. The first port of call should be HMRC. If you can sort out a payment plan with them, they will usually freeze the penalties where they are. They will also usually give you the option of spreading the payments over a period of time.
If you cannot afford this, you'll need to go to a debt charity for advice, such as Citizens Advice or the StepChange debt charity. They may be able to negotiate with HMRC for you and arrange a payment plan you can afford. In the worst case situation they will help you consider other options - which could include bankruptcy.
There isn't a happy ending here. Solving the issue of a late tax return and an unaffordable bill is never going to be straightforward. However, if you continue to hide from the problem and let the fines build up, then you're only going to make things even worse.
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