The 31 January tax return online filing deadline is now zooming at us like a rocket, and if you are due to complete a return and you haven’t done it yet please bear in mind that a late return produces the following painful results:
- Miss due date - £100 fine
- Three months late - £10 daily penalty, up to £900 maximum fine
- Six months late - £300 fine, or 5 per cent of tax due if higher
- 12 months late - £300 fine, or 5 per cent of tax due if higher
These fines apply even if you owe no tax, or HMRC owes you, and they apply cumulatively, so a long-term failure to file can cost you £1,600, or £1,000 plus 10 per cent of the tax due if higher.
In addition to late filing penalties, you may need to add late payment penalties:
- 31 days late - 5 per cent of tax unpaid
- Six months late - 5 per cent of tax unpaid
- 12 months late - 5 per cent of tax unpaid
Plus, of course, interest on late tax. All in all, a late return can be very expensive.
HMRC may agree to cancel these penalties if you have a reasonable excuse for the delay. A reasonable excuse tends to be something serious such as severe illness, bereavement or a disaster like flooding or fire. To benefit, you need to throw yourself at HMRC’s mercy, although you could appeal the decision if they were harsh enough to refuse a genuine excuse.
If there is a genuine serious reason why you can’t file, HMRC will normally be sympathetic. Do bear in mind though that HMRC regularly takes cases to the Tax Tribunal on this subject, so expect to be quizzed on the facts.
Less seriously, HMRC usually publishes a list of the latest crop of outlandish excuses made by taxpayers late in January. In anticipation of this, and as a reminder of what not to claim, we have taken a look at excuses from past hit lists. Some of the best are:
- My husband left me and took our accountant, I am trying to find a new accountant (begs the punchline, I still miss her).
- My return was in my yacht, which caught fire.
- My dog ate my tax return, and all the reminders (extra credit for complete lack of originality).
- My wife has been seeing aliens and won’t let me enter the house (in contrast, truly original).
- I’m too short to reach the letter box.
- My boiler had broken and my fingers were too cold to type.
- My mother-in-law is a witch and put a curse on me.
Some of these sound more like proposals for TV series than excuses for late tax returns. All of them show a high level of optimism and imagination but achieve a very low level of success. As a more practical alternative, we would recommend getting your tax return information together and your return done and filed as soon as possible.
For more information please get in touch with Andrew Robins.