With the tax deadline fast approaching, small businesses have been advised to get their tax returns in on time to avoid heavy interest and penalty charges.
Last week the National Audit Office (NAO) called on the government to simplify the process of filing tax returns for start-up businesses.
The NAO estimates that if the process of filing tax returns of new businesses were improved to the level of the general businesses population, an additional 119,000 start-ups would submit their returns on time.
Tracy Ebdon-Poole, chief executive officer or Taxcalc highlighted the importance of small businesses handing in their tax returns on time if they want to keep their finances in order.
“Last year 10% of tax returns were handed in after the 31 January deadline, leaving the offenders open to pay penalty fines,” says Ebdon-Poole.
Business owners have also been advised to keep their book keeping up to scratch, as a record of all income and expenses must be kept for six years after the end of the tax year, or risk a £3,000 penalty.
Ebdon-Poole advised businesses to make use of the HM Revenue and Customs booklet explaining exactly what records must be kept, and says paperwork should be filed away as you go along, to prevent a mad scramble just before the tax deadline.
The annual interest rate on tax still owed a month after the deadline works out to 65% according to Ebdon-Poole, so businesses are advised to be careful of the interest charges once the January deadline passes.
© Crimson Business Ltd. 2006
