Paying tax after receiving gross interests

markdeer2004

Hello,

I want to know how does the taxman know to expect a tax payment from me on receiving gross interest.

I recently received my annual interest on an account but it was paid gross, not net of basic tax. On the T&C it says it is my responsibilty to pay any tax on the interest received.

So how does the taxman know to expect a tax payment from me? Does the bank/building society notify the inland revenue that I had received gross interest?? What if I don't pay them? (assuming they do not know about the interest paid to me). What is the fine if I get caught?

Also when or is there a deadline to make the tax payments?

neil324

He does'nt, but it's upto you to let him know. Think the fine is upto double what you have tried to evade depending on the circumstances. Deadlines not sure but similar to self assesment i would have thought, which is payments by January of the following tax year. Self assesment he can go back upto 6 years if they become aware so again similar to that i would have thought.

blinko

markdeer2004 wrote: »

Hello,

I want to know how does the taxman know to expect a tax payment from me on receiving gross interest.

I recently received my annual interest on an account but it was paid gross, not net of basic tax. On the T&C it says it is my responsibilty to pay any tax on the interest received.

So how does the taxman know to expect a tax payment from me? Does the bank/building society notify the inland revenue that I had received gross interest?? What if I don't pay them? (assuming they do not know about the interest paid to me). What is the fine if I get caught?

Also when or is there a deadline to make the tax payments?

what account is this ?

gt94sss2

markdeer2004 wrote: »

I recently received my annual interest on an account but it was paid gross, not net of basic tax. On the T&C it says it is my responsibilty to pay any tax on the interest received.

So how does the taxman know to expect a tax payment from me? Does the bank/building society notify the inland revenue that I had received gross interest??

Yes.

Regards
Sunil

googler

The Taxman won't know to expect it, you should declare it on your own self-assessment form.

The deadline will be whatever self-assessment deadline HMRC sets for the tax year in which you received the interest, and are therefore due the tax.

However, if you have received net interest on other accounts, you may want to check if that's been over-deducted - it will have been deducted at the basic tax rate, but if you're not a tax payer, HMRC will be due you a rebate on it.

Loughton_Monkey

neil324 wrote: »

He does'nt, but it's upto you to let him know. Think the fine is upto double what you have tried to evade depending on the circumstances. Deadlines not sure but similar to self assesment i would have thought, which is payments by January of the following tax year. Self assesment he can go back upto 6 years if they become aware so again similar to that i would have thought.

I don't think there is a 'fixed' fine. My understanding is that HMRC could take any action ranging between simply clawing back the correct tax, right through to taking you to court for fraud - with a potential jail sentence.

HMRC routinely get advised, by banks, of accounts and money movements that meet certain criteria. Although I don't know, I suspect large amounts of 'gross interest' (or even small ones) would routinely be reported and computer-matched against tax records.

You may have received gross interest because it was one of those (rare) accounts that simply don't deduct it. If, on the other hand, it was paid gross because you sent them an R85, then they might even consider the act of sending an R85 to be fraudulent if you knew you would be liable to tax.

blinko

i dont think there are any accounts that pay interest gross its set to default as a lower rate tax payer
unless you indicate otherwise

oldvicar

Some NS&I accounts pay gross interest

premierfella

Gross interest is also often paid on accounts with large balances (e.g. in excess of £50k).

Hungerdunger

premierfella wrote: »

Gross interest is also often paid on accounts with large balances (e.g. in excess of £50k).

I'm not saying you're wrong, but I've never heard of this before. Can you point us to a couple of examples?

neil324

Loughton_Monkey wrote: »

I don't think there is a 'fixed' fine. My understanding is that HMRC could take any action ranging between simply clawing back the correct tax, right through to taking you to court for fraud - with a potential jail sentence.

HMRC routinely get advised, by banks, of accounts and money movements that meet certain criteria. Although I don't know, I suspect large amounts of 'gross interest' (or even small ones) would routinely be reported and computer-matched against tax records.

You may have received gross interest because it was one of those (rare) accounts that simply don't deduct it. If, on the other hand, it was paid gross because you sent them an R85, then they might even consider the act of sending an R85 to be fraudulent if you knew you would be liable to tax.

I know it's down to circumstances, but did'nt they just increase the fine for tax evasion from 100% to 200% of the amount evaded, thats why i said double depending and various factors of the case. Of course if you do what Lester Piggot done your going to jail.