Late tax returns: new penalties this year

Personal Tax Sep 16, 2011

As we are approaching the deadline for self-assessment tax returns (SATR), it's worth remembering that this year, there will be changes in the penalty regime for late filed returns. As a reminder, the filing deadline for paper returns is October 31st, and the one for online returns it is January 31st.

The changes were announced in the FA2009 and FA2010 Budgets legislation and included in the relevant Finance Acts. They are mostly:

  • The removal of capping a penalty
  • Automatic fixed £100 penalty immediately the return is late (ie no longer a tax geared penalty for individuals and trustees)
  • Automatic daily penalties of £10 per day for up to 90 days commencing at 3 months
  • A tax geared penalty at 6 months of 5% of the amount shown on the return or a minimum charge of £300
  • A tax geared penalty at 12 months of 5% of the amount shown on the return or a minimum charge of £300
  • The percentage element at 12 months could be up to 100% if, by failing to submit the return, the customers is deliberately withholding information that would enable HMRC to assess their liability
  • Interest will be charged on all late payment of penalties

Also, whilst you should submit the return electronically if you can, there are circumstances such as excluded and special cases, where the return has to be submitted on paper. HMRC have announced that where these paper returns are submitted after the paper filing deadline, i.e. 31 October, the fixed penalty will automatically be issued within about a week, even though the statutory deadline for these returns is 31 January. These returns will therefore require a reasonable excuse claim submitted with them to stop the automatic issue of a penalty if filed after October 31st.


Franck Sidon

With over 15 years of experience as a Managing Director at TaxAssist Accountants, I have helped thousands of businesses and individuals achieve their financial goals and optimize their tax efficiency.