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What are the penalties for filing tax returns late?

When are tax returns due to be filed at HMRC?

  • Individual tax returns                     due by 31st January.
  • Partnership tax returns                  due by 31st January.
  • CT600 Corporation tax returns      due 9 months and 1 day after the companies’ year end.

How much are the penalties if you file a tax return late?

How late:                                                             Penalty:

Missed the deadline by 1 day                               £100.

3 months late                                                        daily penalty of £10 per day to a maximum of £900.

6 months late                                                       the greater of 5% of tax due or £300.

12 months late                                                     the greater of 5% of tax due or £300.

12 months late and the reason for being late is looked at before penalty applied.  If the taxpayer tries to hide information, the greater of 100% of tax due or £300 will be charged.  If the taxpayer does not try to hide anything and is open and upfront with HMRC, the greater of 70% of tax due or £300 will be charged.

Example of an amount of penalty for submitting tax returns late:

Tom has a tax return for 5.4.2021 that should be submitted by 31.1.2022.  He submits the return on 1.2.2022.  Tom will receive a £100 penalty as he is 1 day late. 

David has a corporation tax return for the year ending 31.3.2021.  This tax return is due by 1.1.2022 being 9 months and 1 day after the year end.  The return is submitted on the last day of April 2022 making it 4 months late.  David will first get a £100 penalty on 2.1.2022, then from 1.4.2022 David will get a £10 penalty per day for month 4 until the return is submitted.  The total penalties David will get are £100 + £300 at £10 per day for the 30 days of April.

Can I appeal against a penalty given by HMRC?

If HMRC issue a penalty, you have 30 days from the date HMRC first sent you the penalty notice to appeal.  You can appeal a penalty by:

  • Phone on 0300 200 3310,  
  • Online at HMRC https://www.gov.uk/tax-appeals/penalty
  • In writing to Self-Assessment, HM Revenue and customs, BX9 1AS or use postal form SA370 (or SA371 if appealing a penalty on a partnership return).

Reasonable excuses that HMRC might accept when considering if a penalty should be cancelled:

  • Death of a spouse/partner/close relative shortly before the tax return deadline.
  • You have unexpectedly been admitted to hospital so could not complete your tax returns.
  • You have a serious or life-threatening illness.
  • Computer or software failure just before submitting the tax return and there was not enough time to fix the failure and still reach the deadline.
  • HMRC online portal service issues – HMRC do publish if software crashes or fails at their end.
  • Fire or Flood.
  • Delays due to a disability.

You should make full disclosure to HMRC as soon as you can and submit the late returns as soon as the excuse is resolved.

Excuses HMRC will not accept as reasonable for submitting a tax return late:

  • Your Accountant or someone else submitted your return late.  It is your responsibility to make sure the return is submitted on time, even if you rely on someone else to complete the tax return for you.
  • HMRC online services were too difficult.
  • You did not get a reminder from HMRC.
  • You simply forgot.

What happens once a penalty appeal has been submitted:

HMRC will consider the reason for your appeal.  They will write to you with their decision and tell you what you need to do if you do not agree with their decision.  You can in the first instance call HMRC and see if they agree to cancel the penalty.  If they agree over the phone, they will cancel the penalty and confirm over the phone.  If HMRC do not accept your reason for filing a tax return late over the phone, they will tell you to send in a written appeal.

How much are penalties if you have submitted your tax returns on time, but you pay your tax late?

How late:                                                          Penalty;

Paid tax up to 30 days late                               5% of tax owed.

6 months late                                                    further 5% of tax owed.

12 months late                                                  further 5% of tax owed.

Example of penalties for paying the tax late:

Julie has submitted her 5.4.2021 tax return on time by 31.1.2022.  She submitted the return by September 2021 so was early with the submission but then forgot to pay the £900 tax she owed by 31.1.2022.  Julie pays the tax by 28.2.2022.  Julie will receive a late payment penalty of £45 (£900 x 5%).

What are me next steps?

  1. Always make sure your tax returns are filed on time and tax paid on time.
  2. If you do miss a deadline, contact HMRC immediately and explain why, they will work with you to get the matter sorted.
  3. If you have missed a deadline and need help getting your returns submitted, get in touch with us, we are here to help.


 

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