A Sting in the Tail

HMRC took a light-hearted approach to the New Year by releasing a run down of the most “bizarre and flimsy” excuses they have seen for sending in late tax returns. Some of the more colourful entries included a builder who was mourning the death of his pet goldfish and a woman who claimed she could not concentrate after seeing a story about a volcanic eruption on the news!

Outside of these more spurious explanations, it is fair to say that most of the “reasonable excuse” cases which make it to the Courts are decided in favour of HMRC. This is often a bitter pill to swallow for the taxpayer given the beefed up penalty regime which has been with us for some time now. Certain penalties can apply even if taxpayers do not owe any tax, so it is more important than ever to ensure the filing and payment dates are met.

With the UK tax filing season in full swing, we outline below the key payment dates and filing deadlines. If you require any assistance with the completion of your 2012-13 tax return or any earlier years, please contact us at the earliest opportunity.

Filing deadline

The deadline for filing a 2012-13 UK tax return is 31 January 2014 if you are filing your return on-line. You may be granted an extension if you have only just been notified a tax return is required. If you are unsure whether or not you have to file a tax return, our on-line tool “Do I Need to Complete A Tax Return” should help you decide.

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

The penalties which apply where a 2012-13 tax return is not filed on time are 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. This is in addition to the penalties above.

Tax payment penalties

You must pay any tax you owe for the 2012-13 tax year by 31 January 2014. The payment deadline is the same for both paper and online returns.

By 31 January, you will need to pay one or both of the following:

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

Interest charges if you pay late

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