Late Filing Penalties: what you should know

Categories: HMRC, Tax
what do about self assessment late filing penalties

Each year about 1 million people in the UK miss the deadline to file their self-assessment tax returns and are issued with late filing penalties by HMRC.

  • Penalties start at £100 for missing the 31 January deadline
  • After three months a daily penalty of £10 is charged for the following three months up to a maximum of £900
  • After six months an additional penalty of £300 or 5% of tax due (whichever is greater) is charged and the same again when the tax return is twelve months late
  • In exceptional circumstances HMRC can charge up to 100% of the tax due as a penalty

These penalties are charged even if you don’t owe any tax. There are also penalties for late payment of tax but this is a separate issue. Often late returns lead to HMRC generating estimated tax liabilities called determinations and these stand until you submit the return.

What can you do about penalties?

If you were issued with a tax return you are legally obliged to complete it even if there is no tax to pay or indeed the reason or reasons why you were issued with a tax return previously has ceased, for example, you are no longer self-employed. Alternatively if you consider that you do not need to submit a tax return you can ask HMRC to withdraw it. If HMRC agree, the requirement to complete and associated penalties will be set aside. There is a two year time-limit from the end of the tax year in which to ask HMRC to withdraw the return.

Can you appeal late filing penalties?

It is possible, and indeed HMRC appear to encourage you, to appeal against a late filing penalty but penalties will only be cancelled if you have “a reasonable excuse” for missing the deadline. HMRC’s interpretation of what is a reasonable excuse is quite narrow and the reasonable excuse must have applied for the whole period during which you could have filed the return and not just in say January because you left things too late. Should your appeal to HMRC fail you can take matters further to the First Tier Tribunal and it is possible that they will take a more lenient approach depending on your circumstances.

We regularly deal with tax payers who have missed their tax filing deadlines and we can bring your affairs up to date and help you with making appeals against penalties. Although we do not guarantee success in this area, as this is just not possible, we do have a reasonable success record. If we can be of any help to you, please contact us. Whatever you do, if you have a tax return outstanding you should submit it as soon as possible.