While HMRC is not obliged to disclose the sum of revenue generated from imposing fines for the late or incorrect submission of tax forms, available information points to a very profitable system of penalties. Income from just one tax mechanism for example - the late submission of personal self-assessment tax forms in 2004-05 - generated almost £40 million for Revenue and Customs.

Small firms
Nick Parker, Director of Tax at Tenon, said: "All business leaders need to wake up to the fines they could incur by ignoring tax deadlines. Start-ups and smaller businesses are playing a dangerous game if they aren’t fully aware of the strict deadlines and penalties set down by HMRC. For one thing, they could seriously interrupt cashflow at a crucial point of growth.

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Negligent filing of the expenses and employee benefits form P11D for example incurs hefty penalties of up to £3,000, yet three out of four of the owner-managed businesses surveyed were unaware of this fine.

The level of ignorance was especially high in business leaders managing companies with a turnover of over £20million. Only seven per cent of those surveyed could cite the fine for late submission of a P35 for example, compared to 35 per cent of companies with smaller turnover.

The bi-annual research, conducted by GfK NOP on Tenon’s behalf, questioned managing directors, financial directors and senior directors of 500 small and medium-sized entrepreneurial businesses for analysis by the Tenon Forum, an independent think-tank of entrepreneurs.

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Susie Hughes
The Editor © Hardhatter 2006