Pay up……or else!

I recall reading in the paper a while back about Government outrage at ‘door step’ ‘loan sharks and the high rate of interest they charge on small loans.

The outrage certainly seems at odds with the Government being happy with how HM Revenue & Customs operates!

Self Assessment tax payers who have not settled the balance of their tax liability for 2008/2009 by the 31 January deadline will have recently received a surcharge notice of 5% on their Self Assessment tax liability if the sum owing was still outstanding on 28 February.

Now, interest on a late payment is an accepted part of commercial life and indeed interest is charged on late payment of tax.  But this surcharge is on TOP of any interest and, as I say, is 5%.  For a payment 28 days late.  That’s equivalent to an annual interest rate of 65% per annum.  If a loan shark were charging those rates, I can imagine the disapproval of Government Ministers.

And it is planned from next year that similar penalties will be charged on employers for monthly PAYE payments, starting off at 1% for the second occurrence of a late monthly payment.  Apparently even if only 1 day late.  That’s equivalent to an annual interest rate of 365%!

It shows more than ever the importance of tax compliance and the need for tax advisors who can keep you out of the hands of the loan sharks…..I mean out of the hands of HM Revenue & Customs!

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