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Many people feel that the end of January is something of a calendar milestone as the darkest days of winter finally seem to be getting left behind and spring is another month closer. However, 31 January is also the final date for the submission of Self Assessment tax returns to HM Revenue & Customs (HMRC). If a taxpayer who has been issued with a tax return, or a notice to file a tax return, has not made the appropriate online submission by midnight on 31 January following the end of the relevant tax year, automatic late filing penalties will be levied by HMRC. For taxpayers filing paper returns the relevant deadline is 31 October after the end of the tax year. It is reported that in January 2015 approximately 890,000 people were late filing their tax returns.

So what action should be taken by a taxpayer who has missed the filing deadline? It’s quite straightforward - they should ensure that their tax return is submitted to HMRC as soon as possible because penalties for the late submission of a tax return can quickly mount up. If necessary they should appoint a professional agent to complete and submit their tax return in order to ensure that penalties are kept to a minimum.

Under the current penalty provisions, a fixed penalty of £100 becomes due immediately after the filing date has been missed. If the tax return has still not been submitted three months later the penalty escalates and is charged at a fixed rate of £10 per day until the return is submitted; this penalty level continues for a maximum of 90 days. Where the tax return submission is still outstanding six months after the due date a further penalty is levied of either £300 or 5% of the tax liability on the return – whichever is the greater. A second penalty, calculated on the same basis as the six month penalty, will be incurred if the tax return remains outstanding twelve months after the due date.

The late submission penalties will be imposed even where there is no tax liability shown on the tax return - and therefore this can lead to a significant penalty being suffered. For example, consider the position where a tax return for the year ended 5 April 2014 is submitted to HMRC on 2 February 2016 showing a nil tax liability. The original due date for the submission of the form would have been 31 January 2015 and therefore it is submitted over twelve months late. The total late submission penalties will be £1,600; calculated as the original £100 penalty, £10 per day for 90 days, £300 six month penalty and £300 twelve month penalty.

Where the failure is viewed as being deliberate, i.e. aimed at withholding information to prevent HMRC from correctly assessing the tax, then the penalty can be up to 100% of the tax charged.

In addition to the penalties for late filing of the tax return, where there is a tax liability and this is paid late HMRC will also charge interest and penalties based on the level of the tax due.

However, for some taxpayers there is the possibility that their late tax return filing penalties can be waived if they have a reasonable excuse for the late submission of their tax return. Any appeal against penalties must be made within 30 days of the date of the penalty notice. HMRC give guidance on their website as to what may and what won’t be accepted as a reasonable excuse.

Reasonable excuses include:

  • your partner or another close relative died shortly before the tax return or payment deadline
  • you had an unexpected stay in hospital that prevented you from dealing with your tax affairs
  • you had a serious or life-threatening illness
  • your computer or software failed just before or while you were preparing your online return
  • service issues with HMRC online services
  • a fire, flood or theft prevented you from completing your tax return
  • postal delays that you couldn’t have predicted

Examples of what won’t be accepted as a reasonable excuse include:

  • you relied on someone else to send your return and they didn’t
  • your cheque bounced or payment failed because you didn’t have enough money
  • you found the HMRC online system too difficult to use
  • you didn’t get a reminder from HMRC

The recent announcements regarding the move to digital tax accounts will signal the end of tax returns for millions of taxpayers; and indeed there is also consultation regarding the way in which Self Assessment penalties may be levied in the future. However, as the new system is to be phased in gradually over the next five years many taxpayers may potentially still find themselves faced with late tax return filing penalties unless they take action to ensure that they file their tax return on time.

For help or advice regarding your tax return or any other tax matters contact Carolyn Byrne on 01522 541181 or email