Since Self Assessment was introduced over ten years ago the penalty for a late tax return has been £100, but the penalty did not exceed the amount of unpaid tax. So if you owed no tax, there was no penalty. This year, the initial £100 penalty has not changed, but it will now be charged whatever the amount of your tax liability. And after three months, the penalties really start to hurt; an automatic penalty of £10 per day will be charged, with a further penalty after six months. By that time, the total will have increased to £1,300, and this will be charged even if you do not owe any tax at all.
On top of this, there is a surcharge of 5% on any tax that is paid more than one month late, which is doubled if it is paid more than six months late, and increases again after one year.
Interest will also be charged on late payments.
You will be able to appeal against the penalties, but you will have to prove to HMRC that you have a reasonable excuse for the delay. As far as HMRC are concerned, there are very few acceptable excuses.
You can file online up until midnight on 31 January. If you have not filed online before, don’t forget that you will need to register with HMRC in advance (which takes about a week), so this will have to be done slightly earlier.
And you are not necessarily off the hook if you have not received a return to complete. Although most people do not have to complete a return, anybody with even slightly more complex affairs might have to do so. And it is your responsibility to tell HMRC of this – do not just assume that they already know about you.
Time is running out, so please do get in touch with us if you need some help.