Insolvency advice could be needed for those facing HMRC penalties

British businesses who are struggling with finances might be wise to speak to an expert in order to obtain insolvency advice.

This could be particularly pertinent with Her Majesty's Revenue & Customs (HMRC) having issued a reminder that its new tax penalties come into force.

The tax body has warned that both individuals and organisations will be pursued for late submission of tax returns and late payments of monies due.

Firms and business owners who fail to meet the deadlines – October 31st for paper returns and January 31st for online returns and payments – could see the amount owed grow substantially the longer they leave the debt unpaid or the forms unfiled.

HMRC explained that the new charges will apply to earnings from 2010/11 and will be used for the foreseeable future.

Those who fail to get their returns filed by the deadline face being hit with an automatic £100 fine, even if no tax is due or the payments are made in a timely fashion.

A three-month period will be allowed before daily penalties are applied to the account, with charges mounting up at £10 per day up to a total of £900.

Following this, a £300 or five per cent – whichever is greater – fine will be imposed after the sixth month of tardiness.

Firms or individuals who are more than a year late in submitting their returns will be asked to pay a further £300 or five per cent, with more serious cases seeing an additional 100 per cent of the tax due added to the balance.

Meanwhile, those late with payments will be charged an additional five per cent every tiem they pass the 30-day, six-month and 12-month milestones, with interest also being added to the penalties.

In other news, HMRC recently reminded VAT cheats that they have until the end of the month to own up if they want to take advantage of a reduced fine.