Chapter 2 - Payment Dates, Interest and Penalties

Question 1

Payment of Tax

Answer 1

For income tax, payments on account are made.
- 50% of PY tax due on January 31
- 50% of PY tax due on July 31
Return is then submitted on the next Jan 31. If any extra tax is due after calculating this year’s tax, a balancing payment is made.
All CGT is paid on Jan 31.

Question 2

Interest

Answer 2

Any tax paid late attracts interest from the due date to the payment date. Interest is bank base rate plus 2.5%

Question 3

Penalties

Answer 3

Penalties apply where the payment is not made by 31 Jan after the tax year:
- >30 days late: 5%
- > 5 months after first penalty: additional 5%
- > 11 months after first penalty: additional 5%
Late POA do not attract seperate penalties

Question 4

Reasonable Excuse

Answer 4

Where penalties are charged, a taxpayer can appeal if they had reasonable excuse for failure. Insufficiency of funds is not a reasonable excuse. Examples: postal service messes up or serious illness suffered preventing tax affairs being tended to

Question 5

Partnerships

Answer 5

Partnerships do not pay tax on profits. The profit is allocated to each partner and is handled in their individual returns.