What are the penalties for filing a late tax return?

Regardless of how you file your tax return, any outstanding tax for the 2023/24 tax year should be paid by 31st January 2025. Interest will be charged on late payments after this date.

If HMRC have asked you to complete a tax return for 2023/24, and you miss the deadline, you'll automatically be fined regardless of how small your tax liability is. A penalty will also apply if you are due a refund.

This article will cover the penalties for filing your self-assessment tax return late and how you can avoid them.

Reasons you might receive a penalty

Here are some reasons that may lead you to receive a penalty:

• The submission of a late self-assessment tax return
• A late payment of tax
• Failure to notify HMRC you need to complete a tax return
• Failure to retain full and proper records
• Not contacting HMRC about changes that affect your tax liability
• Errors in a tax return that understates your tax liability or misrepresents your tax liability, unless you took reasonable care. This is known as an ‘inaccuracy penalty’

You may be asking: “Do I need to do a tax return?” – but if you are a sole trader, you’ll generally have to complete a return if your annual gross trading income is £1,000 or more.

You can check if you need to send a self-assessment tax return using HMRC's 'Check if you need to send a tax return' tool.

Penalties for late tax returns

Missing a self-assessment return deadline has some serious implications and the penalties for filing your self-assessment tax return late are currently as follows: 

• 1 day late - Automatic fixed penalty of £100*.
• 3 months late - £10 per day up to a 90 day maximum of £900.
• 6 months late - £300 or 5% of the tax due, whichever is higher.
• 12 months late - £300 or 5% of the tax due, whichever is higher.
• Increased penalties can apply if the withholding of information after more than 12 months is deliberate or deliberate and concealed.

*The automatic penalty applies even if you have no tax to pay or you have paid the tax you owe on time. This charge will kick in if you haven’t filed your tax return by 31st January 2024.

These penalties are in addition to one another, so the minimum late filing penalty for a tax return that is 12 months late will be at least £1,600, depending on the tax liability. 

 Penalties for late payment of tax

The penalties for late payment of tax are as follows:

• 30 days late - 5% of tax due.
• More than 5 months after the first penalty - 5% of outstanding tax due at that date.
• More than 11 months after the first penalty - 5% of outstanding tax due at that date.

Corporation tax late filing penalties

As a business, filing your company tax return after the deadline will also incur CT600 late filing penalties. A CT600 is the name given to the company tax return.

The penalty for late filing of a company tax return are as follows: 

• 1 day late - £100.
• 3 months late - Another £100.
• 6 months late - HMRC will estimate your Corporation Tax bill and add a penalty of 10% of the unpaid tax.
• 12 months late - Another 10% of any unpaid tax.

If you miss three in a row, your £100 penalties will increase to £500 each. 

If you pay your corporation tax bill ahead of schedule, HMRC is duty-bound to pay you ‘credit interest’. The rate is linked to the Bank of England base rate and HMRC publish interest rate guidance for taxpayers. This interest is also taxable income.

My tax return is overdue, what should I do?

Even though your late tax return may have already triggered penalties, it is important to take action to get your return submitted as soon as possible to prevent further penalties and interest charges being applied against you. 

Cancelling a tax return 

If you think you're not required to submit a tax return, you should call HMRC and request the tax return be withdrawn (make sure to check with your accountant first though). If HMRC agree any penalties for missing the deadline may be cancelled.

Remember to note down who you spoke to at HMRC, the expected outcome, and ask when you'll receive a decision.

HMRC is unlikely to withdraw a tax return if you have been self-employed at any point during the tax year – even a very short time will count. Typically, you'll only have two years from the end of the tax year for which the return is due to request its withdrawal, but it's always better to deal with your tax affairs swiftly.

Appealing a penalty online

To appeal against the £100 fine for filing your self-assessment tax return late, you first need to have either filed your return or told HMRC you don’t need to complete one.

You can only appeal the £100 fixed late filing penalty – individuals have 30 days from a penalty notice to appeal (unless a notice gives you a new date on the reverse).

Appealing by post or via phone

To file an appeal via post, download form SA370 and send the completed form to HMRC.

By phone, call 0300 200 3310.

Make sure you have your Unique Taxpayer Reference (UTR) to hand. If you have forgotten your UTR, follow the instructions here.

Paying interest on an appeal and subsequent penalty charges

If HMRC upholds an appeal, you’ll receive written confirmation or you’ll receive a call to confirm the cancellation of the penalty and interest.

If HMRC does not agree to the appeal, this will be confirmed in writing and the penalty and added interest will need to be paid.

Reasonable excuses to appeal a penalty charge

If you have a good reason for the delay, you may be able to appeal against the penalty.

HMRC lists several common examples of reasonable excuses on its website.

These include:

• Your partner or another close relative died shortly before the tax return or payment deadline
• You had an unexpected stay in hospital that prevented you from dealing with your tax affairs
• You had a serious or life-threatening illness
• Your computer or software failed just before or while you were preparing your online return
• Service issues with HMRC online services
• A fire, flood or theft prevented you from completing your tax return
• Postal delays that you couldn’t have predicted
• Delays related to a disability you have

What’s unlikely to be a reasonable excuse? 

The following excuses aren’t usually accepted:

• You relied on someone else to send your return and they didn’t
• Your cheque bounced or payment failed because you didn’t have enough money
• You found the HMRC online system too difficult to use
• You didn’t get a reminder from HMRC
• You made a mistake on your tax return

What happens if I don’t file a tax return?

As stated earlier, not filing your tax return will incur a penalty – but what if you never file one? Can you go to jail for not paying taxes? The answer is usually ‘no’ – but HMRC has a variety of powers available to make you submit a return.

Where a taxpayer fails to meet their obligation to submit a tax return, HMRC has the power to raise a ‘Revenue Determination’ of the liability due and unpaid. HMRC will then pursue this tax debt, so it is really important to ensure you keep your affairs up to date.

If you’ve missed the deadline, file your tax return as quickly as possible 

If you can't withdraw the tax return and you don't have a good excuse, the next best thing is to file the return as soon as is practical – even if you can't afford your tax bill yet. As you've seen, the late filing penalties will increase the longer the delay. 

If you're not sure where to start with your tax return, speak to an accountant who can prepare and submit this on your behalf.

How long do I have to change my tax return?

If you make a mistake on your tax return, you can amend it. Generally you should make changes by 31st January 2025 for a 2022/23 self-assessment tax return. There is also the possibility to make an overpayment relief claim which covers a longer period, but these claims must be made in writing.

 

Date published 10 Jan 2023 | Last updated 7 Aug 2024

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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