HMRC impose fines for submitting your tax return late. We look at how they can quickly stack up.

You should submit your self assessment tax return on time and pay any amounts due by the deadline of 31st January each year. If not, you could be liable to fines.

Not one of our Clients but reported recently, we look here at how HMRC issued fines to Mr P and how it was calculated.

Real Case example

HMRC issued Mr P with a notice to file his 2016/17 self-assessment tax return on 6 April 2017 – which would have been due by 31st January 2018. However, this return was eventually filed electronically on 31 August 2018, seven months after the filing deadline.

Late-filing penalties applied

Penalties for filing a self-assessment tax return late increase the longer a return remains unfiled.

HMRC initially issued Mr P with a total of £1,300 in penalties in February and August 2018, made up of:

  • £100 initial late filing penalty (FA 2009, Sch 55 para 3)
  • £900 in daily penalties (£10 per day under FA 2009, Sch 55 para 4)
  • £300 penalty as the return had still not been filed 6 months after the penalty date (FA 2009, Sch 55 para 5)

The law (FA 2009, Sch 55, para 5) permits a penalty to be imposed at the higher of £300 or 5% of any liability to tax which would have been shown in the return, in cases where the return remains unfiled six months after the filing deadline.

Thus, once Mr P’S return was filed, HMRC increased the total six-month late filing penalty to £943, this being 5% of the tax liability shown on his return (£18,858.74).

This resulted in total late filing penalties of £1,935! And this, on top of any taxes he was due to pay anyway.

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