What is a reasonable excuse?

The deadline for filing your 2012/2013 tax return has come and gone and now 710,000 taxpayers will receive an initial fine of £100 (assuming they actually fine before the end of the month still).

That is unless they have a "reasonable excuse". But what is a reasonable excuse?

HMRC gave the following as examples of what they would consider to be a reasonable excuse:

• A failure in the HMRC computer system
• Your computer breaks down just before or during the preparation of your online return
• An extended period of exceptional weather very close to the filing deadline (which may be very relevant this year)
• Delay caused by HMRC reviewing the need to complete a return
• Loss of tax records through fire, flood or theft
• Serious illness
• Disability
• Bereavement
• HMRC Online Service does not accept the return (where it can be proved a genuine attempt to file was made)
• Delayed receipt of online activation codes after having registered to file online (new for 2012/13 returns)

What is the P35? Do I need to do one?

When you operate a payroll (you have employees), you are required to file an annual return every year. It's done by filing a Form called P35 (even though it's now done electronically). The deadline is May 19th and if you fail to do it in time you will you incur steep penalties. The penalty is £100 per month late and per 50 employees. Moreover, HMRC tends to be very slow in issuing those penalty letters which means that when you receive the first letter, it will most probably be months later and the penalty will have already accrued in the hundreds of pounds.

Missed the tax deadline?

If you are yet to file your self assessment tax return help is still available! But don’t delay as the new HM Revenue & Customs (HMRC) penalty regime will mean that the penalties increase the longer you postpone filing your return. An estimated 1 million taxpayers are expected to receive an automatic late filing penalty of £100 so if you have missed the deadline you are by no means alone. What's different this year however is the new penalty regime.

If you've missed the deadline you'll have to pay a penalty of £100. You should send your tax return online as soon as you can to avoid further penalties. Don't send a paper tax return as the penalties will be even higher. The longer you delay, the more you'll have to pay. When your tax return is three months late, you'll have to pay a penalty for each additional day it is late. When it's six months late, you'll have to pay a further penalty and another final penalty when it's 12 months late. Together these can add up to a penalty of £1,600 or more.

Late tax returns: new penalties this year

As we are approaching the deadline for self-assessment tax returns (SATR), it's worth remembering that this year, there will be changes in the penalty regime for late filed returns. As a reminder, the filing deadline for paper returns is October 31st, and the one for online returns it is January 31st.

The changes were announced in the FA2009 and FA2010 Budgets legislation and included in the relevant Finance Acts. They are mostly:

• The removal of capping a penalty 
• Automatic fixed £100 penalty immediately the return is late (ie no longer a tax geared penalty for individuals and trustees) 

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.