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Ending of payments on account for self certified tax returns

Comment 4th July 2010

Currently the rules are weighted too much in favour of the tax office. There are penalties for late returns understandably, but what isn't reasonable is having to pay tax based on last years earnings before the end of the current tax year before you know what profit if any you have made. I made a loss on my property earnings in 2009/2010 because of repairs needed but had to pay £1750 up front in Jan 2010 ( based on 2008/9 profits ) with a similar amount due in July 2010 if my accountant doesn't get the return done very quickly. It would be fairer if we had an option to say submit and pay by Sept 30 following the end of the applicable tax year. This would save a lot of unnecessary paperwork and potential error in the tax office as you pay exactly what you owe (once). I won't get my money back at the earliest until Jan 2011 (and I didn't owe it in the first place). This is pernicious as the cash flow consequences to small businesses making a loss one year are paying tax they don't owe on top and even worse if you have to borrow to pay it!

 

 

Why does this matter?

The cash flow consequences for small businesses can be serious as they will often have to finance this payment on account of tax they don't owe by borrowing at additional cost, or lose interest on cash they should have had until they get it back eventually from the tax office. My proposal ensures that business pay what they actually owe and simplifies the paperwork in the tax office.

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