Fines and penalties for not completing your Self Assessment tax return

8 January 2019

The 31 January Self Assessment tax return deadline is fast approaching. What are the financial implications if you miss the deadline?

Firstly, there are penalties for submitting your Self Assessment tax return late.

Secondly, there are further penalties for late payment of taxes owed. If you are late with submitting both your Self Assessment tax return and payment of tax you will be liable for penalties and charges on both.

Thirdly, the penalties do not include interest. HM Revenue and Customs (HMRC) will charge interest on any tax owing and on the penalties and charges incurred as a result of the late payment of tax owed. Currently they charge interest at a rate of 3.25%. 

Penalties for late tax return

1 day late = £100 fine from 1 February. 

3 months late = £10 a day fine up to a maximum of £900 (90 days) for every day it is late

6 months late = another £300 fine or 5% of the tax owing, whichever is greater.

12 months late = another £300 fine or 5% of the tax owing, whichever is greater.

Penalties for late payment of tax owing

30 days late = 5% charge on the tax owing on that day

6 months late = 5% charge on the tax owing on that day

12 months late = 5% charge on the tax owing on that day

Interest is charged on the tax owing including the amount levied in charges at a rate of 3.25%.

As an example of how penalties would be levied:

Sophie has been sent a notice to file her 2017/18 Self Assessment tax return by 31 January. She is leaving the UK at the end of the tax year and intends to sort this out when she gets to India. The fact she only owes about a £100 in tax means it’s not top of her agenda. How much will that £100 in unpaid taxes cost her when she makes her 2017/18 Self Assessment return over a year late?

For submitting the form late she will be liable for the following penalties:

  • £100 return being 1 day late
  • £10 per day up to a maximum of 90 days (£900) for being 3 months late 
  • £300 for the return still being outstanding on 1 August 2019
  • £300 for the return still being outstanding on 1 February 2020
  • Total of £1,600 in penalties for a late return

For late payment of tax she will be liable for the following penalties:

  • 5% of £100 for tax liability being outstanding on 2 March 2019 = £5
  • 5% of £105 for tax liability being outstanding on 1 August 2019 = £5.25
  • 5% of £110.25 for tax liability being outstanding on 1 February 2020= £5.51
  • Total penalties for late payment of tax are £15.76 which we will round up to £16 + £100 originally owing = £116.

Then 3.25% interest on £116 = £3.77 round down to £3 so total of £119 owing.

Total for late return (£1,600) + late payment (£119) = Total owing after a year £1,719

Even if Sophie had only managed to submit the return and not paid the tax Sophie would have saved a substantial sum of money. In cases where the tax owing is nominal, it will be the fines for late return that are the issue as they are quite severe, up to £1,600 in the first year. 

It should also be noted that if you make a return which is incorrect, and HMRC feel that you were either careless, or misleading them on the amount of tax you owe, they can charge between a further 30% to 70% of the tax owing. In cases of deliberately concealing and misleading them they can charge 100% on top of the tax owed.

If you would like help completing your Self Assessment tax return, please contact Ann Bibby on 01295 250401 or abibby@ellacotts.co.uk.