Self-assessment tax – late filing penalties from 2011

There are two important deadlines for filing of your self-assessment tax return. If you are completing a paper return, it must be received by HMRC no later than 31 October. If you are filing online, you have until 31 January. So for the year ended 5 April 2011, the deadline for paper returns is 31 October 2011, and for filing online it is 31 January 2012.

Until now there was a penalty of £100 for returns that were filed late, and further penalties and surcharges once the return was more than 3 months late. However if no tax was due, the penalty was waived, so somebody without a tax liability could file their return late without consequence.

From April 2011, a new penalty structure is being introduced. The £100 late filing penalty will now apply even if there is no tax liability. But much worse is the additional penalties for returns that are more than three months late. A charge of £10 PER DAY will be applied on top of the initial £100 penalty, up to a maximum of 90 days, or £900. That means that a return that is filed six months late will attract a penalty of £1,000!

It gets worse for returns that are more than six months late – in addition to the £1,000 of penalties already racked up, HMRC will apply a further £300 charge, or 5% of the tax liability, whichever is greater. If the return still isn’t received after 12 months, this charge of £300 or 5% of the tax liability is applied again.

For example, if a paper return, due 31 October 2011, is received by HMRC on 7 May 2012, for which £8,000 of tax is due, it would be just over six months late. The penalty would be as follows:

Initial late filing penalty – £100
Further penalty after three months at £10 per day, capped at 90 days – £900
Penalty for being over six months late – 5% of £8,000 = £400

Total £1,400

In addition to this there is interest and surcharges on tax paid late! This will be covered separately in a later article.

As you can see, whilst the penalty for filing less than three months late remains quite modest, leaving it any longer now has much more severe consequences, and it is more important than ever to ensure that your tax return is received on time.

For more info and assistance see our main site for N S Bookkeeping & Accountancy.

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