Did you completely forget to complete your Self Assessment Tax Return last month?
Firstly, don’t panic. It’s a common situation to find yourself in – last year, nearly 750,000 people missed the Self Assessment deadline of 31st January.
Secondly, so long as you put it right in a timely manner, you can still avoid the more harsh penalties. Find out more from this blog and get it resolved before the end of April to serious action on the part of HMRC. Then you can get back to managing your business.
What Are The Penalties?
There are two types of penalties: those for not sending your tax return in on time, and those for not paying your tax on time (even if you sent in your return):
Penalties for missing the tax return deadline
If you missed the deadline of midnight on 31st January to complete your tax return – even if you only missed it by a minute – you will automatically have received a £100 fixed penalty. This will need to be paid even if you’ve since sent your return and paid your tax (there are some exceptions, see reasonable excuses later in this blog). And for failing to pay the tax owed by 31st January, HMRC will apply interest at a rate of 3.25% on what you owe.
Once you are 3 months late (end of April) you’ll need to pay £10 for each following day, up to a maximum of £900 over 90 days. This is in addition to the original £100 fixed penalty.
If you still haven’t sent in your return after 6 months (end of July) you’ll need to pay an additional £300, or 5% of the tax due (whichever is higher). Same again at 12 months, £300 or 5% of what’s due. In extreme cases, you may even end up paying 100% of the owed amount again.
Additional penalties for late payment
If you didn’t pay in time then you’ll face these additional fines:
- 30 days late: 5% of the tax due
- 6 months late: 5% of the tax due at that date
- 12 months late: 5% of the tax due at that date
So what do I do now?
If you didn’t file your tax return, that’s what you need to do first – without that, HMRC won’t know how much tax you actually owe and you won’t be able to move forward.
There’s still time before the end of April to complete your tax return, or ask Warr & Co to deal with it for you.
Pay what you owe, limiting the penalties to the original fixed £100 and any possible interest and fines on what you owe.
If you filed your tax return on time but simply forgot to pay, you should have a self-assessment statement from HMRC telling you how much you owe. You can check online by logging into the HMRC portal and navigating to the ‘Get SA302 Tax Calculation for tax year 2017 to 2018’ link.
What if I have a reasonable excuse for missing the deadline?
There are many amusing excuses given every year for not completing tax returns on time (a favourite of ours in 2019 was “my mother-in-law is a witch and put a curse on me”!) but when there really is a reasonable excuse for missing the deadline, help is available.
HMRC class a reasonable excuse as “something that stopped you meeting a tax obligation that you took reasonable care to meet”, such as:
- A partner or close relative passing away shortly before the deadline
- A serious of life-threatening illness, or an unexpected stay in hospital
- A software or computer failure just before or while you were preparing your online return
- Service issues with HMRC online services
- Fire, flood or theft
- Delays related to a disability you have
If you believe you have a reasonable excuse for missing the deadline, you have 30 days to appeal the fixed penalty. In order to appeal, you need to have completed your tax return and payment, so do that first. Then, you can send your appeal to HMRC in a number of ways (see website for more instructions).
What About Next Year’s Self Assessment Tax Return?
Tax is taxing, we understand that nobody loves completing their tax return, but the best advice is to complete it early. You can complete your 2018-19 tax return from 6th April 2019. Get it out of the way for a full year and get a clear view of what you need to pay in January 2020.
On the other hand, why not let Warr & Co deal with it for you by taking advantage of our Self Assessment services.
All we ask is that you notify us that you’d like to use our Self Assessment service if possible by October 2019. You can get your name on the list by submitting your details here and we will be in touch.
Self Assessment Request Form: