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Tax penalties and what you need to know

Other posts by  |  Colin Corlett on Google+ |  January 2, 2014 | 0 Comments
Colin Corlett

Colin Corlett

This article looks at the penalties that can be assessed on you for not submitting your tax return on time. The amounts involved and the consequences can be quite surprising.

We should start off by saying that the penalties discussed here only apply to tax payers who have a tax return to make. Many people pay their taxes through PAYE and they will not need a tax return.

However, if your circumstances are complicated in any way and there is a chance that your tax might be wrong then you should be issued with a tax return to fill in. For a lot of people this is given in a short or abbreviated form and it is very easy to do. Alternatively, there is the option to submit the return online.

What happens if you are late filing your taxes?

A paper return is late if submitted later than 31st October after the tax year. For an online return you have until 31st January following.

If you are one day late there is a £100 fine.

If you are three months or more late then you will be fined £10 per day for up to 90 days.

If you are six months late then there is an additional £300 or 5% of the tax due if more.

The six-month penalty is then repeated at the 12-month overdue date. At this point there might be even amounts levied if there is any indication that the delay is deliberate.

So you have £100 + £900 +£300 +£300 = £1600 of penalties for being 12 months late.

You might well ask who would not reply to persistent reminders from the taxman? Well there are actually a lot of circumstances where this could apply.

  1. Sole traders where the business has closed down, maybe it’s been sold or the owner has just simply retired. You think the business is gone so there are no more tax returns but you are wrong and suddenly you have these penalties to pay.
  2. People who have lost their jobs. Any new income they receive is below the tax thresholds so they don’t believe they have any more tax due. They are right of course, but because they don’t complete the documentation the penalties start to mount up.
  3. People who lose their homes and maybe start to live on the streets. The reminders will never find them and suddenly they have even more debts to pay.

Is there anything else to consider? Well yes, if you miss the 31st October deadline for paper filing then you have until 31st January to file on line. Do not make the mistake of filing a paper return between November and the end of January.

In conclusion it is well worth the trouble to file your returns on time. Don’t leave it hidden in a drawer or believe that because you have little or no tax to pay then the penalties will not apply to you.

Disclaimer. As with everything in the tax world there are always exceptions and instances where additional rules can apply. This article is written for general guidance only and you should always consult a qualified professional.

Written by Colin Corlett, Chartered Accountant, who offers good professional advice at an affordable rate. You can contact him through

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Category: Industry news

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