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Late Filing of Returns

Over recent years some people, both accountants and their clients, have become a little lax in respect of the filing deadline for personal tax returns that result in no tax liability or even a refund. Indeed this has sometimes been the case for returns which, although showing a liability to tax, all liabilities have been settled ahead of the deadline. This was because, historically, there was a capping on any penalties for the late filing of returns at the level of tax owed (for personal tax returns; not partnership returns). From the tax year ended 5 April 2011 this is no longer the case.

The new penalty system is as follows:

£100 – Flat penalty if the return is not filed by the deadline (31 October after the tax year end for paper returns and 31 January after the tax year end for returns filed online).

£10 per day - For each day the return is late, subject to a maximum of 90 days.

Higher of £300 and 5% of the liability that should have been on the return – If the return has still not been filed 6 months after the deadline.

Higher of £300 and a fixed percentage of the liability that should have been on the return – If the return has still not been filed a year after the deadline (the percentage generally being 5% but possibly up to 100% in certain circumstances).

This would mean that someone who owes no tax in respect of a return that was not filed on time could be penalised £1,600 if their return is filed late.

The penalty system for the late filing of self assessment tax returns is completely independent, of course, from the penalty system for the late payment of any tax liability.

Late Payment of Tax

The penalty system in respect of the late payment of tax is as follow:

5% - Where the tax is not paid within 30 days of the liability becoming due.

5% - Where the tax is not paid within the following 5 months.

5% - Where the tax is not paid within a further 6 months.

This, as said, is completely separate to the penalty system for the late filing of returns. However, it should be noted that where a “time to pay” agreement with the Revenue is in place before the due date and has not been breached, no surcharge is payable.

If you are concerned about the way this may affect you please do not hesitate to contact us at .