3 Things about penalties and interest for late or non-submission of tax returns.
1. When it comes to HMRC, they may seem like the enemy, but they would much prefer individuals and businesses do things properly and honestly, so that they can come down harder on those that deliberately conceal and dodge tax. If you know that you have cashflow, get the tax return (VAT, Self Assessment or Corporation Tax) submitted to HMRC in good time, allow 72 hours for it to show on the system and then get on the phone to HMRC. You can ask for a payment plan, spreading the payments over anything up to 12 months. By being proactive, you can avoid penalties for non-submission and non-payment, and avoid interest as well.
2. Keeping your accounts up to date, using a tool such as Xero or a similar cloud accounting package, can help you predict your tax liabilities ahead of time, ensuring you are better prepared. Knowing where to find this information is KEY to running a successful business. This is why we point all our Xero clients to the report section with a basic introduction to the reports in our onboarding sessions. We also get in touch with our clients three months before the end of their financial year to check in on their figures and see if we can help save any tax. In addition, if your bookkeeping is kept up to date, our job of preparing accounts and tax returns is a lot more straightforward, meaning we can turn the work around in a shorter time, and give you longer until the deadline to pay any tax (just in case there are any surprises due to not checking those key reports on a regular basis!!)
3. To be even more proactive, and keep on top of your tax liabilities, I'd recommend looking at some sort of forecasting software, where you can identify your cashflow dips, and make sure you are better prepared for all your liabilities. HMRC and Companies House take responsibilities of directors of limited companies very seriously, and non payment of taxes is not looked at favourably. So be proactive, keep accurate and regular records, and don't bury your head in the sand!