Self Assessment (SA) tax penalties
There are tax penalties for both late filing of SA tax returns and for late payment of tax due under SA.
A new system of late filing penalties applies to 2010/11 returns (those due on 31/10/11 or 31/1/12).
STOP PRESS: announcement -there will be no penalties for returns filed on 1 and 2 February 2012 due to strike action at HMRC.
A key feature of the new regime is that the late filing penalty is not reduced if tax is paid on time, see Late filing a SA return: automatic penalties
There are no changes to late payment penalties. Interest is charged on both unpaid tax and unpaid penalties.
|
Late filing |
Late payment |
Penalty |
|
Miss filing deadline |
|
£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 taxpayer is held to be deliberately withholding information that would enable HMRC to assess the tax due. |
|
|
12 months late |
5% of tax outstanding at that date |
|
12 months & taxpayer deliberately withholds information |
|
Based on behaviour:
Reductions apply for prompted and unprompted disclosures and telling, giving and helping. |
Late filing example:
John goes to Australia on a sabbatical and accidently forgets to file his 2010/11 return, he has a tax liability of £10,000. He clocks up penalties as follows:
| Trigger date | Penalty |
| Miss filing deadline: 31 Jan 2012 | £100 |
| Unfiled after 3 months: 30 April 2012 | £10 per day |
| Unfiled after 6 months: 31 July 2012 | £300 |
| Unfiled after 9 months: 31 Oct 2012 | £300 |
Late payment example:
John's SA tax due for 2010/11 on 31 January 2012 £10,000
If the tax is not paid penalties will accrue as follows:
| Trigger date | Penalty |
| Unpaid by midnight 1 March 2012 | £500 (5%) |
| Unpaid by midnight 1 August 2012 | £500 (5%) |
| Unpaid by midnight 1 February 2013 | £500 (5%) |
We note that the examples of penalties on HMRC's website did not initially account for the fact that 2012 is a leap year.
Time to pay agreements
If the taxpayer makes a time to pay agreement with HMRC the penalty is suspended.
- The taxpayer will become liable to the penalty if the agreement is broken.
Special reduction
- Although HMRC must assess a penalty if one is due it may make a special reduction if it sees fit.
This is at HMRC's discretion; the taxpayer has no right of appeal if HMRC refuses to make a special reduction. The Tribunal may reduce a penalty on appeal.
Appeal
The taxpayer has 30 days to lodge an appeal with HMRC if there is a reasonable excuse for filing a late return or making late payment.
Small print
The legislation is found in Schedules 55 and 56 FA 2009
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