Published in the Wigan Observer:
In my last article I looked at a few ways you could reduce your tax bill, with the self assessment deadline looming on the horizon. That deadline has now passed and 1.1m taxpayers did not file on time, resulting in £110m in fines, despite record numbers filing online this year. So, what are the consequences of missing the deadline and what can you do about it?
This year, unlike previous years, there is a £100 automatic penalty for filing late, regardless of how much tax you owe, or even if you owe nothing. So, if you file 1 day after the deadline you will receive a £100 fine. For a paper return the deadline was 31 October, and for an online return it was 2 February (with the 2 day extension given this year because of strike action at HMRC call centres). Many people think that, if they haven’t filed a paper return by 31 October, they can’t file a paper return at all and must file on line, but that isn’t true – you can file on paper, but additional fines will start to apply 3 months earlier.
3 months after the relevant filing deadline additional penalties kick in, of £10 per day, to a maximum of £900. So, if there is one piece of good news it is that, if you have missed the deadline, you effectively have another 3 months to file before any further penalties apply. So you could file on line on 30 April and the fine will still be £100, although I wouldn’t advocate leaving it that late.
After 6 months a further penalty of 5% of the tax due or £300, whichever is greater applies, and then again after 12 months another 5% or £300, whichever is the greater.
You can however avoid a fine by claiming “reasonable excuse”. But what is reasonable excuse? It’s fair to say that few people will be successful in such a claim. These are HMRC’s own examples of what can be a reasonable excuse:
a failure in the HMRC computer system
your computer breaks down just before or during the preparation of your online return
a serious illness has made you incapable of filing your tax return
you registered for HMRC Online Services but didn’t get your Activation Code in time
And these are HMRC’s own examples of what is NOT a reasonable excuse:
found the online system too complicated to follow
left everything to your accountant to do and they let you down
forgot about the deadline
did not try to re-submit your return on time once a problem with the IT system was put right
registered for HMRC Online Services after the filing deadline
Clearly the best course of action is to file early. Filing early doesn’t mean you have to pay any tax due earlier, that deadline remains 31 January. And if you are due a refund you will receive that soon after filing – the sooner you file, the sooner you will receive your refund. And for those of you using an accountant, spare a thought for them, as they try to manage a deluge of information being received from clients during January.
If you want to claim reasonable excuse there is inevitably a procedure to follow. The claim must be in writing and HMRC provide a form to help with this. Good luck!