HMRC are punishing the late filing of tax returns with fines of up to £1,600 even if you have paid all the tax due.

Some people used to focus on paying their tax on time, but were not so concerned about meeting the deadline for filing their tax return, due to the fact that in the past, the fine was capped according to the amount of unpaid tax at 31st January following the end of the tax year, but this is no longer the case. Now a taxpayer who is one year late in filing his return could accumulate total penalties of £1,600 even though he may have paid all the tax due.

  • Day one: an initial penalty of £100
  • Three months late: an automatic daily penalty of £10 per day for up to 90 days – maximum £900
  • Six months late: an additional £300 or 5% of any tax liability which would have been shown on the tax return. Note it is whichever is the higher of these two amounts
  • 12 months late: a further £300 or 5% of any tax liability which would have been shown on the tax return, whichever is the higher of these two amounts

The deadline for filing tax returns for a year ending on 5th April, falls on the following October 31st if the return is filed on paper but does not need to be filed until the following January 31st, if the return is filed on line.

HMRC’s tougher approach to late returns follows other campaigns to increase revenues.
In previous years the penalty for late filing was a maximum of £100 and this was subject to the amount of tax outstanding as at the 31st January. This gave no incentive for taxpayers to file if they thought they had no further tax to pay. That’s one reason almost a million taxpayers filed their returns late each year.

The change to the penalty regime is considerably more aggressive and penalties could very quickly run into thousands with further penalties such as interest and surcharges on top.

This change will come as a shock to many taxpayers who had been able to avoid late filing penalties simply by ensuring that they did not owe any tax by the January 31 deadline.

HMRC have been tasked by the Government to achieve the filing targets for tax returns which they had been missing. The get-tough approach to late tax returns with a £10 per day tariff plus £300 penalties could turn into a nice little earner for the Treasury.

Our charges for completing and filing your tax return start from £200, which is significantly lower than the penalties for late filing. Further, we will offer advice on the expenses that can be offset against tax to help you minimise your tax bill and help you to avoid further penalties by assisting you to complete your tax return accurately.