New penalties for people missing the May 1 deadline for tax returns are contributing to the estimated £6m per day HMRC is raking in from late completions.
That’s the stark warning from Bristol-based tax specialists Refunds Direct which claims the new system introduced by HMRC has resulted in those working in the construction sector facing much heavier penalties for missed deadlines.
Refunds Direct managing director Carrie Large said the new tariff meant that missing the deadline by one day could now cost builders £100 – even if they have no tax to pay.
Carrie said: “Those within the build sector should be aware the penalties are cumulative – if you miss the tax deadline by three months not only will you have to pay the initial £100 but the penalty goes up by £10 per day to a 90-day maximum. This applies from 1 May, so anyone who still has an outstanding tax return should be aware the meter is ticking!
“Anyone who is six months late then faces a further £300 penalty or five per cent of the tax due whichever is higher. After 12 months serious cases run the risk of being ordered to pay 100 per cent of the tax due instead.”
Refunds Direct claim some 600,000 people across the UK have already missed the May 1 deadline – and are contributing around £6m to HMRC per day in penalties.
Carrie added: “Clearly it is important for those in the construction sector to get up-to-date as quickly as possible as these cumulative penalties could in extreme cases end up in three, four or even five figure sums.
“Those who work in the sector have had it tough enough anyway and tax penalites could be the difference between staying afloat or going bust!”
But it’s not all bad news – Refunds Direct say it is possible construction sector workers worried about late payment could still discover they are owed hundreds of pounds in overpaid tax in the first place.
Carrie said: “Those working in the sector seem reluctant to investigate their tax affairs for fear of incurring penalties.
“In fact around four out of ten construction workers who took our free review discovered they were owed money, typically up to £1,300.
“Our aim is to help construction workers to understand the new penalty system and to help them avoid penalties, bringing them up to date with their tax affairs and helping them to claim back refunds owed to them.”
Refunds Direct have set up a free one-minute tax review to enable construction sector workers to ensure they haven’t handed too much money back to HMRC.
Carries said: “Nobody enjoys seeing their hard-earned cash going to the taxman. But sticking your head in the sand will only result in further penalties which will mount up quicker the longer you leave it.
“Builders have been labouring under the impression that by taking a closer examination of their tax affairs they risk even bigger bills from HMRC. In fact, prompt attention to tax returns will keep HMRC away from the door – and they might even discover the taxman owes them money.”
Refunds Direct are registered with HM Revenue & Customs as tax agents and hold the necessary claims management licence for pursuing financial refunds and have refunded in excess of £5 million pounds since 2004.
Covering the last fours years its free tax review examines PAYE income, Construction Industry Scheme (CIS), expenses and Jobseeker’s Allowance (JSA).
Carrie concluded: “Building workers have a very healthy respect for our tax system but we have the expertise to get the most back for their hard work. We work on a no refund, no fee basis and is therefore risk free for construction workers who think they are in line for a rebate.”
