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Self Assessment – what you should know about late tax filing penalties

by 1st Contact | Nov 06, 2012
  • Make sure you don’t cut into your annual take-home pay by being forced to hand over hundreds of Pounds in tax penalties, which most likely could have been avoided in the first place.

    By preparing well in advance and understanding the different penalties, you can ensure your tax matters are always up-to-date and that you’re never left out of pocket.

    Below are the most common mistakes made, as well as the relevant deadlines and penalties involved.

    Late tax returns

    The tax return deadline for paper returns is 31 October, meaning it must reach HMRC by midnight on the 31st of October. The only exception is if you received a letter after 31 July informing you that you must send in a return.

    The deadline for online returns is 31 January, meaning it must reach HMRC by midnight on the 31st of January – unless you receive a letter after the 31st of July requesting that you send in a tax return, in which case you have three months from the receipt date to get your return in.

    If you miss a deadline, you automatically pay an instant fixed penalty of £100, whether you owed any tax or not. After that, penalties are incremental:

    • 3 months overdue: £10 for each day after Day 1, to a maximum of 90 days / £900. This is in addition to the £100 fixed penalty above.
    • 6 months overdue: £300 or 5% of the tax that is due, whichever is higher, in addition to the penalties listed above.
    • 12 months overdue: £300 or 5% of the tax due, whichever is the higher, in addition to the penalties listed above. In some cases you could even be required to pay up to 100% of the tax due.

    Late tax payments

    The deadline for paying any tax you owe is by 31 January, following the end of the tax year. The deadline is the same for both paper and online returns.

    The penalties for late payments are as follows:

    • 30 days overdue: 5% of the tax you owe at that date
    • 6 months overdue: 5% of the tax you owe at that date, in addition to the 5% above
    • 12 months overdue: 5% of the tax unpaid at that date, in addition to the two 5% penalties above


    Tax returns and other documents that are filled in inaccurately will incur a penalty, unless HMRC believes you have taken “reasonable care” to get it right.

    This includes:

    • keeping accurate and up-to-date records
    • checking with HMRC if there’s anything you don’t understand
    • being prompt in telling HMRC about any errors you notice in a tax document you’ve received or sent

    Failure to notify

    This penalty applies when you fail to tell HMRC about any of the following on time:

    • you have started a business that must be registered with HMRC
    • your new business has made a profit
    • your business turnover has reached the VAT registration threshold
    • an asset sale made a capital gain
    • any other changes in your circumstances which may affect your tax position

    VAT and excise wrongdoing

    This penalty will be incurred when you:

    • handle goods where excise duty has not been paid
    • use a product in a way that changes how much excise duty should have been paid
    • supply a product at a lower rate of excise duty when you are aware that it will be used in a way that warrants a higher excise duty rate
    • issue an invoice that includes VAT when you aren’t legally allowed to charge VAT

    Minimise your penalties and optimise your tax liability

    One of the most reliable ways to ensure absolute tax compliance and the avoidance of penalties is to partner with a professional accounting firm with a long history of UK tax matters.

    1st Contact Accounting’s personal tax service includes collecting all the necessary information from you, performing the tax calculations and submitting all the relevant information, on time and with 100% accuracy.

    Instead of risking handing over your hard-earned money to HMRC, enlist the services of a leading professional and save yourself (and your business) time, money and legal complications.

    Visit our website for more information or call 0808 141 1624 to speak to a tax consultant.

    We are a professional services company that specialises in cross-border financial and immigration advice and solutions.

    Our teams in the UK, South Africa and Australia can ensure that when you decide to move overseas, invest offshore or expand your business internationally, you’ll do so with the backing of experienced local experts.

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