HMRC imposes stiff penalties for late filing and payment of tax returns, including a £100 penalty for filing just one day late. The penalties increase over time, up to £900 for filing over three months late and a minimum of £1300 after six months. Additional penalties are levied for unpaid taxes. To avoid extensive penalties, individuals should ensure tax returns are filed and any taxes owed are paid on time.

1. Penalties Imposed by HMRC
HMRC will impose stiff financial penalties for
both late filing and late payment of tax returns.
Those hit with a late filing penalty are generally
also subject to a late payment penalty too!
This can all add up to be very expensive!

2. If you file electronically (due 31st
January) and are just one-day late, you
will be liable for a penalty of £100!
This applies even if you have already
paid the tax, or if you do not actually
owe the revenue anything!
The penalty is purely for late filing!

3. The £100 penalty is a flat fee that
applies for the first three months.
After those three months you will be
charged £10 per day for 90 days
This could cost you up to £900.

4. After six months HMRC will charge 5% of
outstanding tax (minimum of £300)
As the tax bill is probably not known HMRC
will perform a ‘determination’ and estimate
what you may owe.
At this point you will have at least £1300 in
fines to pay and possibly more depending on
the ‘determination’.

5. After 12 months there is another 5% (minimum
£300) penalty of the outstanding tax bill.
At this stage an individual will have added a
bare minimum of £1600 and in reality a lot
more.

6. The stated penalties are purely for the failure to
supply paperwork.
Most individuals in this situation will also not
have actually paid their tax and so will be hit
with additional fines for non payment!

7. The first penalty for non-payment is 5% of the
outstanding tax if it is not paid within 30 days
(tax is generally due on 31st January).

8. Once it gets to six months another 5% penalty of
the unpaid tax is levied.
All this time interest on the outstanding amount
is also being added to the bill – interest is
charged on both the outstanding tax and the
unpaid penalties.
And don’t forget the charges for the non-filing
too! Ouch! This is getting expensive!

9. After 12 months another 5% is added – again
calculated on the entire outstanding amount!
After 12 months have passed and no tax has
been paid the question you are asking might
well be;
What happens if you can’t pay your tax bill?

10. HMRC put non-payers into one of two
categories;
‘can’t pay’
or
‘won’t pay’

11. Can’t pay – it is likely that HMRC will be open to
making an arrangement in the form of a payment
plan.
Once you make an arrangement it is imperative
that you pay what you agreed.
The second stipulation is that you must keep
current tax liabilities up to date – it is
unacceptable to pay off arrears whilst continuing
to build them up in the current tax year.

12. Won’t pay – if HMRC believe that you can pay
but are refusing to liquidate assets they will take
the legal route.
You will receive letters and phone calls, the case
will be passed to a debt collection agency, you
will receive CCJs and be taken to court.
Ultimately the choice comes down to;
pay, or, go to jail!

13. The only sensible thing to conclude from all of
the above is to file your return and pay your bill
on time!
If you have any questions on self
assessment call 01708 320 596 and
speak to one of our experts.

14. Holgate Court Accountants in Romford provide
all the usual accounting services as well as;
Solicitors accounts
Bookkeeping
Management accounts
Holgate Court Accountants
8 Holgate Court,
4-10 Western Rd,
Romford,
RM1 3JS
TEL: 01708 320596