There are many reasons why a tax return might be filed late, and the taxes not paid on time, but there are penalties …

LATE RETURN PENALTIES

The late return penalties are structured as follows:

-a £100 fixed penalty which arises regardless of whether any tax is actually due or unpaid at the date due
-daily penalties of £10 per day which start to accrue after 3 months, subject to a maximum of £900
-after 6 months of default, an additional penalty of 5% of the tax due or £300, if greater
-if still outstanding after12 months, a further 5% or £300, whichever is greater.


LATE PAYMENT PENALTIES (Sch 56 FA 2009, CH150000)

-Additional penalties apply in the case of late payment of tax as follows:
-5% of the amount of tax unpaid 30 days after the payment due date;
-further penalties of 5% of any amounts of tax still unpaid at six months;
-further penalties of 5% of any amounts of tax still unpaid at 12 months


An appeal can be made against a penalty on the basis of having a “reasonable excuse”. This is broadly defined as circumstances that prevented filing, for example, illness of the taxpayer or a close relative, or loss of business records due to theft, fire, etc. The conditions preventing filing must continue throughout the default period, i.e. the period from the due date to the actual filing date (para 23, Sch 55, FA 2009, CH61500).

HMRC do have a discretionary power to withdraw the requirement to file a return where, for example, it is issued in error, or they agree it is not required. If agreed by HMRC, any penalties related to the return in question would cease to apply.The time limit for withdrawal of notice to make a return is 2 years of the end of the tax year concerned, i.e. by 5 April 2021 for a 2019/20 return. This can be done either at the request of the taxpayer or agent or otherwise at HMRC’s own discretion (s.8B TMA 1970, SAM120115.

Provisional Tax Returns

Depending on the complexity of the return and the information currently held, it may be possible to file a provisional return which can be amended later. HMRC’s guidance is contained in SAM121190 and on page TRG14 of the Tax Return Guide SA150.