Up to 1,000,000 taxpayers missed the deadline on January 31st this year, according to MoneySavingExpert, making late penalty fees an indisputable goldmine for the Treasury. Last year, HMRC wrote off a total of £23million in late self-assessment fines.
Accountants and professional bodies across the country are calling for the system to be scrapped but, so far, there is no sign of change coming anytime soon.
So, where do taxpayers stand who miss the deadline?
Penalty for late tax return – paper filing
| Date | Deadline | Fines & penalties |
| 5th April 2020-31 October 2020 | Paper filing | N/A |
| 1 November 2020-31 January 2021 | First three months’ lateness | £100 |
| 1 February 2021-30 April 2021 | Second three months’ lateness | £10 a day fine (up to £900 fine if still not filed by 30 April 2018) |
| 1 May 2021-31 July 2021 | Third three months’ lateness | 5% of tax due or £300, whichever is greater |
| 1 August 2021-31 October 2021 | Fourth three months’ lateness | 5% of tax due or £300, whichever is greater |
Penalty for late tax return – electronic filing
| Date | Deadline | Fines & penalties |
| 5th April 2020-31 January 2021 | Electronic filing | N/A |
| 1 February 2021-31 April 2021 | First three months’ lateness | £100 |
| 1 May 2021-30 July 2021 | Second three months’ lateness | £10 a day fine (up to £900 fine if still not filed by 30 April 2018) |
| 1 August 2021-31 October 2021 | Third three months’ lateness | 5% of tax due or £300, whichever is greater |
| 1 November 2021-31 January 2022 | Fourth three months’ lateness | 5% of tax due or £300, whichever is greater |
Penalty for late tax return – 12 months lateness
If HMRC do not receive a late filing in the 12 months after the deadline, they may assume information is being withheld deliberately. This can lead to them filling out your tax return themselves and deciding the amount you owe them. When HMRC believe your delay is deliberate, they will also decide whether your delay is:
• An attempt to conceal your tax affairs from the authorities. If they conclude it is, you will be fined 100% of the tax you owe, or £300 depending on which figure is higher.
• Not an attempt to hide the amount you owe from HMRC. You will still be fined 70% of the tax due or, again, £300 if that is higher.
They may apply certain reductions for showing a “giving and helping” attitude during the process and for unprompted disclosures.
Interest on late filing penalties
Interest is chargeable on both unpaid tax and any penalties you are charged.
How would HMRC deal with a late filing and late payment?
If a return is severely delayed, the penalties can mount quickly.
If you do not send in your tax return for the 2019/2020 year by 31st January 2021 however instead file it on the 1st February 2022, this is how your fines would accrue before interest was applied if your tax bill was £20,000.
| Type of penalty | Reason for penalty | Charge for penalty |
| Filing | Missed filing deadline of 31 January 2021 |
£100 |
| Payment | Tax unpaid by 1 March 2021 | £1,000 (5%) |
| Filing | Missing 3 month late deadline of 30 April 2021 |
£10 a day (up to £900) |
| Filing | Missing 6 month late deadline of 31 July 2021 |
£1,000 (5% or £300 whichever is greater) |
| Payment | 1st August 2021 – tax six months late | £1,000 (5%) |
| Filing | Missing 12 month late deadline of 31 January 2022 |
£1,000 (5% or £300 whichever is greater) |
| Payment | 1st February 2022 – tax twelve months late |
£1,000 (5%) |
Time to pay arrangements
To avoid deliberate late payments, HMRC offers a “time to pay” arrangement for those who feel they will struggle to pay their tax bill.
If HMRC accept your request, you will be able to spread your bill over up to 12 months from the due date. This is an option available for personal taxation, corporate tax, VAT and sometimes PAYE.
Immediately after self-assessment day, HMRC starts to pursue tax payers who have missed their deadlines, so it’s recommended that you apply for Time to Pay before then. Let them know how much of your bill you can pay and assure them you have explored other methods of covering your bill before asking.
They will want to know about your:
– Income,
– Expenditure,
– Assets,
– Savings and investments,
– And what you are changing in order to not require Time to Pay again.
Time to Pay is usually paid in instalments by direct debit. Defaulting on even one payment could be considered a breach of your agreement with HMRC; meaning you may need to pay the outstanding amount immediately, potentially additional fines.
Do you need to do a self-assessment?
Visit the government website to see if you are required to complete a self-assessment.
If you don’t meet the criteria, you should tell the taxman as soon as possible. If you don’t inform them, and you miss the deadline, you may start to accrue penalties. You must contact HMRC and ask them to withdraw your self-assessment.
You may only withdraw your tax return if all your income during the period was taxed through PAYE or savings income, or if you had no taxable income in that year. If you’re self-employed, you still need to fill out a tax return regardless of your tax liability.
You can request a withdrawal of your self-assessment form by calling HMRC on 0300 200 3310.
How to appeal a late penalty
Make sure you file your tax return before appealing against a late filing penalty. You will be expected to send in your tax return as soon as possible, within 14 days of whatever it was that caused the delay in the first place. You should make your appeal straight away too, in at least 30 days of the penalty being issues to ensure it will definitely be considered.
You will need to make your appeal in writing and with a Form SA370 – click here to download.
If your appeal is rejected, you can then ask for a review by another official. This may help if you failed to include information in your initial application that may have helped your case. If this is not successful, you could also appeal to the First Tier Tax Tribunal to challenge the decision.
HMRC may also consider a reduction in your penalty if your late payment was due to special circumstances.
What do HMRC or the First Tier Tax Tribunal consider as reasonable grounds for appeal?
If your excuse for late filing is considered acceptable by the HMRC and First Tier Tax Tribunal, they will waive your entire penalty. The Tribunal is thought to be more considerate what qualifies as a reasonable excuse for late filing, so taking your case to them can often be a good last resort to appeal the decision.
Valid grounds for appeal include:
• the death of a partner or close relative shortly before the tax return and payment deadline
• an unexpected stay in hospital
• a serious or life-threatening illness
• your computer or software failed just before you submitted your online return or while you were doing it
• fire, flood, or theft
• postal delays that you could not predict
• disability-related delays
• service issues related to the HMRC Self Assessment website (click here to read planned downtimes and service issues)
• registered for online filing before the deadline but didn’t receive your access code on time
Simple Assessments
Self-assessments were replaced for some by the new Simple Assessment in 2017. Tax payers that are either…
a) claiming their state pension for the first time, whose income in 2016/17 was higher than that year’s personal allowance rate of £11,500
b) contributing to the system through PAYE who have underpaid their tax but cannot have their underpaid tax collected by HMRC
…will be taking part in the switch.
Make sure you never miss a deadline again
Working with our team, you’ll never miss a deadline. We’ll make sure that all of your details are submitted correctly and on time. We’ll advise you on what you need to pay well in advance of the deadlines.