I agreed to do the “late return” for £400.00 and got on with it.I will say, it took a lot longer than I expected, simply because his records were not the best, and it would take 3 or 4 e-mails before he would reply to any questions, and then the answers where always incomplete. In the end it took nearly 3 months to get to a point when I could submit the return. Even getting it approved took nearly 2 weeks, and 3 e-mails. So of course when I finished this “late tax return”, I had done a lot more than £400.00 worth of work. But I’d agreed to do it for £400.00 so that is what I charged.
When HMRC processed his tax return, his final tax bill was £952.82 which was not too bad. I had asked him to pay money to the tax office on account, to minimize the potential interest, plus surcharges. Eventually he did after a few months, and before I submitted the tax return. In the end he had to pay a penalty of £47.00 (5% of the tax due) because the payment for the tax was more than 30 days late. But no other surcharges.
However for submitting the tax return late he was fined £900.00, for being more than 3 months late, plus £300.00 for also being 6 months late.
Total fines came to £1,247.00 and this did not include the £14.09 interest charged on the £952.82 up to when HMRC received the payment on account.
He was very unhappy when I told him that I would have to charge more for his next tax return, and I don’t know if he will ask me to do it, especially as I would like to get it done now and not leave it until the last minute. He is away on holiday at the moment and has told me he will speak to me when he returns. Ironically I do wonder what kind of holiday he would have been able to have if he not had to pay the extra £1,261.09 in addition to the tax. I have made suggestions on how it he could make it better but so far he has chosen not to try any of them. The suggestions aren’t to reduce the potential costs, it’s just to stop them spiraling out of control.
I am wrong in thinking; it would have been cheaper to pay the extra accountancy fees in the first place?