Self-Assessment Tax Return penalties

What happens if I miss a self-assessment tax return deadline?

If you haven't filed your tax return by the 31st of January or you've missed your July payment on account, HMRC will chase you. The penalties for failing to file your return or pay your tax are severe.

If you miss a filing deadline by one day, you're already looking at a £100 fine.

Depending on which deadline you've missed, you can expect daily penalties or fines of a percentage of the tax you owe. If HMRC thinks you're deliberately hiding something, they will investigate further and there may be serious consequences if this is the case.

Tax penalities

Penalties for file Self-Assessment late

There are tax penalties for lateness of filing your self assessment tax returns and for late payment of any tax due. If you miss either deadline then interest is charged on both unpaid tax and unpaid penalties so it's vital you don't get in a position of increasing fines just because it "slipped your mind" or you "didn't have time". There are very few reasons that HMRC will accept as valid for late filing or payment. If you do need to file late then it is crucial that you let them know as soon as possible to demonstrate that you are doing your best to remedy the situation.

Late Filing	Late Payment	Penalty
Miss filing deadline of 31 Jan		Automatic £100
	30 days late	5% of tax due
3 months late		Daily penalty £10 per day for up to 90 days (max £900)
6 months late		5% of tax due or £300, if greater
	6 months late	5% of tax outstanding at that date
12 months late		5% or £300 if greater, unless the tax payer is held to be deliberately withholding information that would enable HMRC to assess the tax due.
	12 months late	Based on behaviour: deliberate and concealed withholding 100% of tax due, or £300 if greater. deliberate but not concealed 70% of tax due, or £300 if greater. Reductions apply for prompted and unprompted disclosures and telling, giving and helping.

Example of late payment fines:

Bill goes away travelling and forgets to file is his tax return for the previous tax year before he goes. When he comes back he realises his mistake and files his return straight away, but his self assessment tax return has been filed 12 months late on a tax liability (the tax he owes for that year) of £10,000.

Trigger date	Penalty
Missed filing deadine: Jan 31st	Automatic £100
Unfiled after 3 months: 30th April	£10 per day(for total of £900)
Unfiled after 6 months: 31st July	£300
Unfiled after 12 months: 31st Jan	£300

For a total of £1600

Example of late payment fines

Not only does Bill get hit with the penalties for not filing on time, he gets an additional set for not making his payments on time, too:

Trigger date	Penalty
Unpaid by midnight 2nd March	£500 (5%)
Unpaid by midnight 1st August	£500 (5%)
Unpaid by midnight 1st Feb	£500 (5%)

For a total of another £1500.

So instead of having to pay just his tax bill of £10,000, Bill now has to pay £13,100 and deal with all the stress and worry that comes of being on the wrong side of HMRC.

This example doesn't even take into account if Bill had payment on accounts due for the upcoming tax year, which would increase the late payment penalties even more.

Changes to self assessment fines

What's changing with Self-Assessment fines?

As of September 2017 the rules for working out penalties have changed. Make a mistake in your tax return and you could be hit with a penalty of up to 100% of what you owe.

Of course, there's a difference between a simple, honest mistake and deliberately cheating HMRC. The trouble is, it's up to you to convince them that you're on the level. Even sloppy bookkeeping can land you with a penalty of 30% of the tax you owe. If the taxman thinks you're being shifty with your return, it goes downhill fast. You can expect as much as a 70% penalty for deliberately underestimating what you owe. Actively trying to hide the fact that you're cheating can ramp that up as high as 100%, depending on your situation.

Making mistakes

What happens if I've given the wrong information in my Self-Assessment tax return?

You might be able to fix the problem before you get a penalty. You can make changes to your Self Assessment tax return for up to 12 months after the deadline for filing it. If you do your taxes online, this is as simple as logging in and correcting the error. If you file on paper, it's a little more complicated. You've got to download another copy of the Self Assessment form and send in the pages you've changed.

The main thing is to get it all done quickly. You can easily end up getting a penalty if the taxman thinks you've:

Deliberately understated how much tax you owe.
Deliberately claimed too much for expenses or tax relief.
Been careless or dishonest with your bookkeeping.

Generally, if the mistake was honest, you told them about it yourself and took quick steps to fix it, you probably won't get a penalty. If the worst comes to the worst, you might still be able to limit the damage by co-operating with the taxman's investigation. It won't get you off the hook, but it might make things a little less painful.

Genuine mistakes

What happens if I make a genuine mistake?

If you make an honest error and let HMRC know about it, your penalty can drop by 30%. Giving them access to your records to back up your story can also carve 30% off. If you actually help them track down the problem, you could cut the penalty down by 40%. In any case, admitting to the mistake early is your best best. The longer you wait, the more suspicious you look when it all comes out.

No matter how complicated your Self Assessment problems are to unravel, if it takes over 3 years to get them straightened out, you've got even more trouble. After that point, whatever penalties you're facing could jack up by at least another 10%. Even if you've been co-operating enough to get your penalty cancelled, that 10% will still apply. If you didn't alert HMRC to the mistake yourself, and they found it on their own, then your minimum penalty after 3 years is 25%.

In the past, openly calling attention to your mistakes could see you avoiding penalties altogether. That seems like a less likely outcome from now on, though. That's why it's so important to talk to RIFT if you've spotted a problem with your Self Assessment Tax Return. We're on great terms with HMRC, and have a strong record of protecting our customers when they've made honest mistakes. Better yet, using the RIFT Tax Return Service means you'll never get lumped with a penalty in the first place. We've got the expertise to keep your returns error-free and filed on time.

What is a reasonable excuse?

Are there any valid reasons for giving late or incorrect information?

Yes, a few - but you have to be realistic about your chances. For instance, here are a few situations HMRC considers to be "reasonable excuses" for missing a deadline:

HMRC gave you the wrong advice or never let you know you had to file.
You were hit by a serious illness or other difficult personal circumstances.
You made an honest attempt to file or pay online, but without your knowledge a technical error messed it up.
Bank errors or postal delays.

Keep in mind that you can't just lie and assume you'll be let off. Giving more false information after you've already been caught will only make things worse. That said, the taxman isn't interested in punishing people for things that genuinely weren't their fault. If you've taken all reasonable care over your payments and paperwork, you shouldn't come off too badly.

Mistakes happen

What if HMRC has made a mistake?

This certainly can happen, and it occasionally does. If you get a surprise demand from HMRC for a tax return or payment, make a fuss straight away. It could be a simple mistake, or maybe even a case of identity theft.

Whatever the reason, you need to get it clarified as quickly as possible. Whatever you do, don't stick your head in the sand and think the demands will stop. They won't, and they'll just keep getting louder if you ignore them.

Fines

How many people get a Self-Assessment fine?

Just under a million people missed the tax return deadline in January 2020 - receiving an automatic fine of £100.The taxman's getting serious, so it's time to get your books in order. Remember, the January the 31st deadline for filing your return and paying the tax you owe is already up. If you're running late, your penalties are already stacking up – and they're only going to get higher as time goes by.

Take a look at our online tax return calculator for a free quote for our Tax Return Service, or get in touch by phone or email for more information. If you're already facing a penalty, definitely get in contact as soon as possible. You'll be surprised how much we can do to help.

Help

Can I get help?

Absolutely! At RIFT Tax Refunds, we've been helping people with their tax worries since 1999.

Whether you think you might be owed a tax rebate or have questions about your tax codes we can help. If you can't understand why the taxman's chasing you, we'll solve the mystery.

If you've already got a penalty, we might be able to get it reduced or dropped entirely. If you're having trouble getting your paperwork done right and filed on time, we're here to help.

Tax is often a painful subject, so let the RIFT tax return service help take the sting out of it.

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