£100 late filing penalty refund question

Gem7321

Hi

I'm completing a late tax return for a client who has been issued with £100 late filing penalty. Profit is just over £6k so no tax liability but there will be a small class 4 liability - he has suffered tax deducted at source (CIS) so will be due a repayment.

Will he get the £100 refunded because there's no tax liability even though there's a class 4? Or should I claim some CAs so there's no class 4?

Thanks

Monsoon

I'm pretty sure it's based on the amount outstanding at 31st Jan. If the net position is a refund then the tax (and NI) outstanding is Nil and so the penalty should be reduced to Nil.

99% sure but wait for someone else to confirm

Monsoon

I've just re-read that and feel stupid, I'm now confirming I know I'm right. I still want reassurance though!

T.C.

Yep, had that a couple of times and the £100 is always refunded. Not sure if that rule in changing in the future though as the penalties are changing!

Newbie

Yes the fine cannot exceed the amount of tax owed, i.e zero tax bill = zero penalty, however for returns 2010/2011 this is being scrapped and no longer applies.

Gem7321

Thank you!!

deanshepherd

See here for a brief summary of the new penalty regime.

T.C.

Handy summary, thanks.

Gem7321

Thanks Dean