Monday, April 4, 2011

Tougher penalties for late filers

The new HMRC penalty regime for late filing and late payment of self assessment income tax begins on Wednesday (6 April). As a result, a tax return filed six months late could attract a penalty of at least £1,300. In the past, being late to file your tax return would generate a fine but that fine would be waived is no tax was due. Not anymore!

The new sanctions are:
  • Just one day late: an initial penalty of £100, even if there is no tax to pay or all tax owed has been paid.
  • Three months late: an automatic daily penalty of £10 a day up to a maximum of £900.
  • Six months late: further penalties charged of the greater of 5% of tax due or £300.
  • Twelve months late: the penalty will be the greater of 5% of tax due or £300. In serious cases, a higher penalty of up to 100% of the tax due could be charged.
The penalties are on top of the interest HMRC will charge on outstanding amounts, including unpaid penalties, until payment is received.


As before, fines will be sent automatically to self assessment taxpayers who do not file and pay on time. The taxpayer will be able to appeal against any penalty on the grounds that they have a reasonable excuse for not complying on time, but beware that reasonable excuses are well documented and being busy is not one of those!

Note: These represent just a small subset of the many changes that the new 2011 budget brings. For a more in-depth review, please check our presentation of the new budget.

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