HMRC’s penalty regime is under two main categories:
- Late Filing of Tax Returns
- Late Payment of Tax Liability
Late Filing Penalties
There are two main deadlines for submitting your Tax Return:
- Paper submissions – 31st October following the end of the tax year.
- Online submissions – 31st January following the end of the tax year.
There can be circumstances where you have a different filing deadline to the above, for example if HMRC issued you a ‘Notice to file’ later than the above dates.
Failure to submit your Tax Return on time incurs the penalties listed in the table below. The penalties are cumulative and are incurred even if no tax is due!
|From Filing Due Date||Penalty|
|Missing Filing Deadline||Automatic penalty of £100.|
|3 months late||£10 per day up to a maximum of 90 days.|
|6 months late||£300 or 5% of the tax liability, whichever is greater.|
|12 months late||£300 or additional 5% of the tax liability, whichever is greater.|
HMRC can also assess the behavior of the taxpayer. There is a separate penalty regime for deliberate or “deliberate and concealed” failure to file a Tax Return. This article is aimed at late filers only. A deliberate non-filer could face penalties of 100% of potential lost revenue and a criminal conviction. We strongly recommend seeking further advice should this affect you.
Late Payment of Tax Penalties
These penalties are assessed on the outstanding tax liability. If you have not settled your tax liability by the due date of 31st January after the end of the tax year, the following penalties will apply:
|From Payment Due Date||Penalty|
|After 30 days||5% of tax liability.|
|After 6 months||Additional 5% of tax liability.|
|After 12 months||Additional 5% of tax liability.|
Taxpayers should be aware that HMRC will charge interest on the late payment of tax. If you are a taxpayer that is required to make payments on account, interest will also be charged. Interest is charged from the due date of the payment.
What if I disagree?
If you disagree with the penalties HMRC have levied, you have the right to appeal. Notice of appeal must be given in writing within 30 days of the assessment.
You will be required to provide a “reasonable excuse” for why your return was not timely filed. HMRC’s website gives a few examples of what is classified as a reasonable excuse and the excuses that will be disallowed. HMRC Website – Reasonable Excuses
If you are yet to submit a late Tax Return, it is important to note that paper submissions should be avoided as penalties will be applied from the 31st October deadline.
This is a basic summary of the penalties HMRC can impose. Should you require a more detailed list of potential penalties that you may be open to or you require assistance with filing your UK Tax Returns, please contact one of our consultants.