Late Tax Filing Penalties

03 February 2015

The deadline for submitting your Self Assessment tax return for 2013-14 has passed. The online filing date, after which penalties apply, was midnight, 31 January 2015.

Penalties for Individuals:

If you failed to make the filing deadline a range of penalties becomes payable, or potentially payable. The amount will depend on how quickly you bring your affairs up-to-date.

Penalties are progressive: they apply from 1 day, 3 months, 6 months and 12 months after 31 January 2015 for the 2013-14 return.

  • One day late: an automatic penalty of £100 applies.
  • 3 months late: a daily penalty of £10 per day for a maximum of 90 days applies (£900).
  • 6 months late: a further £300 or 5% of any tax outstanding, whichever is the greater.
  • 12 months late: a further £300 or 5% of any tax outstanding, whichever is the greater. In serious cases you may be asked to pay 100% of the tax due instead.

The above penalties are in addition to any penalties and interest for paying tax late.

Penalties for Partners:

Even though a partnership tax return is one document, each partner will be charged a penalty for late filing. If a partner is also late in filing their own tax return then separate penalties will apply.

The penalties listed in points 1 and 2 above will be payable by each partner. The penalties in points 3 and 4 will be limited to £300 per partner.

A Reasonable Excuse for Late Filing

You may feel aggrieved that you were unable to file your return on time for a perfectly valid reason. If you want to appeal against any penalties charged there is a formal appeals procedure you should follow. In order to convince HMRC to withdraw their penalty notice you will have to convince them that you had a reasonable excuse.

The following examples, of what constitutes a reasonable excuse, are copied from HMRC’s website:

  • HMRC Online Services would not accept the tax return – you will need to provide the error message you received and the date you tried to send it.
  • You did not receive the tax return or letter telling you to complete a tax return - HMRC usually know if you did not because it is sent back undelivered.
  • Bereavement - the death of a close relative or domestic partner shortly before the deadline.
  • Serious or life-threatening illness, for example, a major heart attack or a serious mental illness that prevents you dealing with your tax affairs.
  • You did not receive your online Activation Code, User ID or password in time to send your tax return by the deadline - as long as you tried to get them before the deadline and once you received them you sent your tax return as soon as you could.
  • Your tax return or cheque was lost or delayed in the post. You must have posted it in good time to meet the deadline.
  • Loss of tax records, through theft, fire or flood that cannot be replaced in time to meet the deadline.
  • Your cheque was dishonoured because of an error by your bank.

What HMRC will not accept as a reasonable excuse includes:

  • The tax return was too difficult to complete.
  • Pressure of work.
  • It was your agent’s or tax adviser’s fault that you missed the deadline.
  • Lack of information available.
  • We did not remind you about the tax return and payment deadlines.
  • You want to replace the paper tax return you have already sent with an online tax return to reduce your penalties.
  • Unable to send a certain tax return or supplementary pages online as there was no free HMRC software.
  • Your cheque was dishonoured due to a shortage of funds or made out incorrectly.

The best possible strategy to avoid penalties is to file your tax return before the statutory deadline. If you are prevented from doing so by circumstances that you feel constitute a reasonable excuse, then you should appeal against the penalty.

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