Self Assessment Tax return – 2011/2012 Penalties laid bare

Your online tax return must reach HMRC by midnight 31 January. The only

exceptions to this rule are as follows:

1. you receive HMRC’s self assessment notification letter after 31 October.

In this case, your deadline is 3 months from the date of receipt.

2. for those who owe less than £3000 and want HMRC to collect their tax

through their tax code, there is an earlier deadline of 30 December.

Let’s now talk Penalties (applicable from 6 April 2011) for late filing of Tax

Returns..

The later your submission, the more the penalty. Note that the penalty for a

partnership is ‘self assessment penalty’ x the number of partners. For example, if

a sole trader is penalised £100 for submitting a day late, the equivalent penalty

for a partnership with 3 partners will be £300, split equally amongst the

partners.

If the tax return is filed 1 day late:
Fixed Penalty is £100. This applies even if you have no tax to pay or have paid the tax you owe.

If the tax return is filed 3 months late:
£10 for each day starting from the beginning of the fourth month – up to a 90 day maximum of £900

PLUS the fixed penalty for filing a day late.

If the tax return is filed 6 months late:
Fixed Penalty of £300 or 5% of the total tax due, whichever is the higher

PLUS the penalty incurred for being 3 months late

PLUS the fixed penalty incurred for filing a day late.

If the tax return is filed 12 months late:
Fixed Penalty of £300 or 5% of the tax due, whichever is the higher.

In exceptional cases, you may be asked to pay up to 100% of the tax due.

The penalty incurred at this stage is in addition to the penalty incurred for filing 6 months late

PLUS the penalty incurred for being 3 months late

PLUS the fixed penalty incurred for filing a day.

To worsen matters …

If your tax return is filed late, HMRC may estimate the tax owed which you must pay

including any interest on tax paid late. In addition to this, you incur the

penalties indicated above for late submission.

Paying the tax owed – Deadlines

31 January

Tax owed under Self assessment must be paid by 31 January following the end

of the tax year. So if you are preparing a tax return for the year 2011/2012, you

must pay any tax owed by 31 January 2013.

Tax owed is one or both of:
1. balance of tax owed for the previous tax year
2. the first of two payments on account for the current tax year

31 July
Second payments on account must be made by this date.

Penalties for late payment of Tax
The later your payment, the more the penalty.

If the tax payment is 30 days late:
5% of the tax owed at that date.

If the tax payment is 6 months late:
5% of the tax owed at that date

PLUS the penalty calculated for being 30 days late.

If the tax payment is 12 months late:
5% of the tax owed at that date

PLUS the penalty calculated for being 6 months late

PLUS the penalty calculated for being 30 days late.

Not forgetting good old Interest charges:
3% interest is payable on all tax owed plus any unpaid penalties.

Something to be thankful for..
Penalties do not apply to late payments of any of the two payments on account.

So, you might want to put all the cash towards settling the tax owed rather than

splitting it between tax owed and first payment on account.