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Late self-assessment tax penalties

By
Elliott Jones

You run the risk of incurring a fine if you miss your deadline for HMRC to receive your Self-Assessment tax return. If you are posting a paper return, they must receive this by 31st October, whereas you have until midnight on 31st January to submit your online return.

The fines imposed are on a sliding scale which mounts up as the delay in receiving your return lengthens.

One day late   

You will have a fine of £100.

Between one day and three months late

You will be fined £10 for every late day thereafter, up to a £900 maximum (90 days). So, if you add this to the initial£100 fine for being one day late, you could be paying up to £1000.

Up to six months late

As well as the fines you have already had imposed, you will receive another fine of either 5% of the total amount of your tax bill, or £300 – whichever is the highest amount. 

Up to twelve months late

On top of all the penalties you have incurred so far, you will receive another £300 fine, or 5% of your total tax bill, depending on which is the higher amount. 

Unfortunately, once you have missed your tax return deadline, you will be on HMRC’s radar as a possible persistent offender to be watched closely. If you are consistently late in filing your return over two years, the penalties for the third year will rocket up to £500 per day.   

In normal circumstances, therefore, the longer you leave the job of completing your Self-Assessment return, the worse the fines and penalties become.   

This year, HMRC recognised that there might be exceptional circumstances due to the Coronavirus crisis, which could have caused a delay in filing tax returns. They, therefore, extended the 31st January 2020 deadline to 23rd April. However, that may not be the case for 31st January 2021. 

Late Company tax returns 

HMRC needs to receive your Company tax return no later than 12 months after the end of your chosen accounting period. Even if you have made a loss in the twelve-month period, or you have no Corporation Tax to pay, a Company tax return must still be submitted by the deadline.  

The penalties for late filing after your deadline are as follows:

One day late

A fine of £100 

Between one day and three months late

A further fine of £100 on top of the first £100. 

Up to six months late

If they still haven’t received your Company tax return by this deadline, they will estimate the amount of Corporation Tax due,and add on a further penalty of 10% of their estimated figure, on top of thepenalties already incurred. This is referred to as HMRC’s tax determination, and you are not allowed to appeal against the amount they decide is due. 

Up to twelve months late

HMRC will add another 10% of your estimatedCorporation tax bill onto everything incurred to date.  

Late VAT returns

Different VAT return deadlines apply, depending on whether you are using the VAT Annual Accounting Scheme or the Payments onAccounts system.  

HMRC will note a default on your returns record if you fail to meet your VAT return deadlines 

Once you have defaulted on submitting your return on time, you may be in a potential surcharge period of twelve months, which means you may have to pay an extra amount on top of the VAT you already owe to HMRC.  

If you continue to miss your VAT return deadlines during the initial twelve-month surcharge period, you will have the surcharge period extended to a further twelve months. 

If you send in a late VAT return, you may be able to avoid any surcharges if you pay your VAT in full, by the deadline, or have no VAT to pay, or are due for a VAT refund.   

Surcharges

The surcharge will be calculated as a percentage of your VAT bill, which remains unpaid by the deadline for the accounting period, which is in default. This surcharge rate will increase each time you default again during a surcharge period.

In addition to possible surcharges for late submission of your VAT returns, there are some penalties which HMRC can apply for inaccurate VAT returns or for not filing your returns online unless you have been told you are exempt from doing so.

  • The penalty for sending a Vat return with a deliberate or careless     error can be up to 100% of any tax you have over-claimed or understated.
  • There may be a penalty of 30% of an assessment if you have been     sent one by HMRC which is too low, and you have not told them that it is     wrong within 30 days.

The surcharges are applied on a sliding scale as follows:

Defaults within the 12-month period

Less than £150,000 annual turnover

£150,000 or more annual turnover

1st default

No surcharge payable

No surcharge payable 

2nd default

No surcharge payable

2% (no surcharge if this is less than £400)

3rd

2% (0% if less than £400)

5% 0% if less than £400) 

4th

5% (0% if less than £400)

10% or £30 (whichever is more) 

5th

10% or £30 (whichever is more)

15% or £30 (whichever is more) 

6 or more

15% or £30 (whichever is more)

15% or £30 (whichever is more)

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