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HMRC introduce stricter penalties for late tax returns

Posted on by Paul Murphy

As of 2010, HMRC (HM Revenue & Customs) introduced stricter penalties for those who failed to file income tax self-assessment returns on time. HMRC may now penalise anyone failing to submit their tax return on time, anyone who has not paid owed tax on time, or even those who have made mistakes on tax returns if HMRC suspect that they were made intentionally.

Previously, penalties for late tax returns did not apply to individuals who had paid the tax that they owed. However, since 2010 HMRC have become increasingly strict, applying these penalties (with interest) to anyone who fails to submit tax returns on time regardless of whether they actually owe any tax.

HMRC’s deadline for paper returns is 31st October. However, there is an extended deadline on 31st January for those that have missed the original date so that they can still submit their returns online. Should this second deadline be missed then HMRC will charge a fixed penalty of £100. It is also important to note that this £100 penalty will still apply to those who submit a paper tax return after 31st October. It is therefore crucial to ensure that only online returns are submitted after this date.

In excess of one million people were penalised this year after missing the final deadline. For that reason it is important that anyone who is self-employed and required to complete self-assessment tax returns is made aware of the charges that they could face should these deadlines be missed.

HMRC will increase the penalty with the amount of time that passes before the tax return is submitted. After three months has passed, a charge of £10 per day is incurred in addition to the initial £100 fine (for a maximum of 90 days reaching £900). If the tax return is six months late, an additional £300 or 5% of tax owed is charged depending which amount is higher. When the deadline has been exceeded by 12 months, a further £300 or 5% of the amount owed is charged (again, whichever is the higher amount).

This could result in a hefty fine of up to £1600 for the tax payer, regardless of whether any tax is owed to HMRC.

HMRC accept appeals against penalty decisions providing the appeal is made within 30 days of receiving a penalty notice. Appeals will only be considered if special circumstances or a reasonable excuse (usually beyond the tax payer’s control) are provided. For example, serious health problems or the loss of records that are necessary for the completion of tax returns through a fire or a flood. According to HMRC, the inability to pay tax that is owed does not class as a reasonable excuse for late payment or filing tax returns late.

Simplyco are expert contractor accountants and give offer a tax return completion service to its clients. If you are interested in learning more about this service or any others, please give us a call on 01900 898 440 or email

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