What effect does having a constant +12V on the drain have on an N-channel MOSFET?
Pretty much everything about this circuit is wrong.

If your schematic is accurate, you are blinking the LED by shorting out your 12V rail.  This is NOT a good idea, for a couple reasons:

1) I don't know what your "timer" is, but I doubt it likes having its power supply shorted every time the LED is turned off.

2) Depending on how much current the 12V supply can source, it could easily destroy the MOSFET because the current is too high (nothing to do with the voltage).

3) Depending on what kind of supply the 12V is, shorting it out could damage it or at least trigger an overcurrent reset which will mess with your timing.

Below is an example of a correct way to switch an LED.  I'm assuming the "timer" is "some circuit which is powered from 12V and generates a square wave output at suitable levels for the MOSFET gate limits".  (As Christ Stratton and other mentioned, 12V gate drive is too high for this MOSFET)







simulate this circuit &ndash; Schematic created using CircuitLab