File on time and avoid penalties!

It was reported in today’s FT that HMRC issued 915,000 penalties for late filed 2011/12 Tax Returns.  This is likely to have amounted to over £100,000,000 in penalties being paid.  These penalties could easily have been avoided.

The new tax return penalty regime has been in force for some time now and there’s little leniency or room to appeal these penalties without a reasonable excuse.

With penalties potentially amounting to over £2,000 for late filing, the best way of avoiding these is to file on time!

Now follows the details in respect of late filing and late payment penalties which HMRC could charge, if we can be of any assistance with filing your tax returns please contact us.

The filing deadlines for 2012/13 UK Tax Returns are as follows:

31 October 2013: – If you are filing a hard copy paper return;

31 January 2014 – If you are filing your Return on-line.

You may have an extension to the above dates if you have only just been notified a Tax Return is required.

There’s an earlier deadline of 30 December if you want HMRC to collect any tax due through your PAYE (Pay As You Earn) tax code. You can only ask for this if you owe less than £3,000.

If you are unsure whether or not you have to file a tax return, our on-line tool should help you decide: “Do I Need to Complete A Tax Return

If you do need to complete a Tax Return for 2012/13 but have not notified HMRC you should do so at the earliest opportunity. You will then be issued with a tax reference and will hopefully still be able to meet the filing deadline.

Late filing penalties apply in respect of the 2012/13 Tax Return, as follows:

Length of delay Penalty you will have to pay
1 day late A fixed penalty of £100. This applies even if you have no tax to pay or have paid the tax you owe.
3 months late £10 for each following day – up to a 90 day maximum of £900. This is in addition to the fixed penalty above.
6 months late £300 or 5% of the tax due, whichever is the higher. This is as well as the penalties above.
12 months late £300 or 5% of the tax due, whichever is the higher. In serious cases, you may be asked to pay up to 100% of the tax due instead. These are as well as the penalties above.

Tax Repayment

If you have overpaid your tax and are due a refund this is normally received within two to four weeks of filing your Return.

As of 27 January 2009, the rate of interest paid by HMRC in respect of overpaid tax has been a meagre 0%. If you are owed a repayment it makes sense to file your Return at the earliest opportunity.

Deadlines for Paying Your Tax

31 January 2014

You must pay any tax you owe for 2012/13 by 31 January 2014.

The payment deadline is the same for both paper and online returns.

You will need to pay one or both of the following:

  • any tax you still owe for 2012/13, the ‘balancing payment’
  • the first of two ‘payments on account’ towards your 2013/14 liability, where appropriate.

31 July 2014

This is your deadline for making any further payments on account towards 2013/14, where appropriate.

The following surcharges (separate to the penalties as above) will apply if you pay your tax late:

Length of delay Penalty you will have to pay
30 days late 5% of the tax you owe at that date i.e. if any part of the balancing payment due on 31 Jan is not paid by 1 March.
6 months late 5% of the tax you owe at that date (in addition to the 5% penalty above) i.e. if any part of the balancing payment due on 31 Jan is not paid by 31 July.
12 months late 5% of the tax still unpaid at that date (in addition to both 5% penalties above) i.e. if any part of the balancing payment due on 31 Jan is not paid by the following 31 Jan.

The late payment penalties do not apply to any payments on account that you pay late.

Interest charges if you pay late

You will have to pay interest (currently 3%) on anything you owe and haven’t paid, including any unpaid penalties, until HMRC receives your payment. Surcharges will also start to attract interest if they are not paid within 30 days.