Penalties For Late Self-Assessment Tax Returns

Tax Forms Business

Most people in the UK have tax deducted as part of their salary as an employee and so do not need to file a self-assessment tax return. However, if you’re self-employed, a business partner, director, receive pre-tax passive income of £10,000 or more, you will need to complete a SA100 to HMRC by the 31st of October in paper form, or the 31st January with the online version. Failure to do so will incur a penalty from HMRC.

The standard penalty for late payment is £100. From there, you may incur additional charges accumulating the longer you fail to complete a return and send it to HMRC. This applies even if you have to tax to pay, or even if you have paid the tax you owe. It is the return that is crucial in this particular respect. From there, if your return is still not completed, you will incur a £10 penalty, per day, for up to 90 days, accumulating in a £900 addition to the initial £100. If your return is 6 months late, an additional fine of £300 or 5% of the tax due – whichever is the highest of these two variables – is then due on top of the previously mentioned penalties. After 12 months, another £300, or 5% will be incurred on top of all preceding penalties mentioned.

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As you can see, it is imperative not to fall into this ever-increasing penalty scheme and to pay within the deadline, or, if that is impossible, then as soon as possible. The longer you leave it, the more you pay. There are, however, certain situations where HMRC will waive penalties if there is a reasonable reason for failing to complete a return by the prescribed deadline and you appeal against penalties for late filing. These include: the recent death of a partner; fire; computer failure; the breakdown of the tax authority’s online service for completing tax returns or an unexpected visit to the hospital for medical reasons. It is worth mentioning that each case is judged individually on appeal and these are not necessarily a list of get-you-off-the-hook excuses. The reason has to be legitimate and you may need to explain why if prevented you from completing a return by the deadline. In some cases this is self-evident, and in some scenarios it may be less so. This is also not a definitive list and other reasons may be considered. Again, HMRC decides each case individually.

Because of the potentially significant penalties that one could accrue, it’s vitally important that you file your tax return within the deadlines. It’s best to register well in advance to give yourself plenty of time to complete the task and decide which way you’re going to submit. It may be worth looking up the form and how to complete in advance so you’re aware of how long it may take you to complete or pool the relevant information required, or even hire somebody else to do it if you do not feel you yourself can do so. Either way, the more you know sooner, the better, and you can plan ahead to avoid those daunting penalties.

Sep 4, 2015