Penalties: Self Assessment (SA) late filing, payment, notification & error

Self Assessment (SA) tax penalties: What penalties are due for outstanding tax returns? What penalties are due for late payment? Are there any situations where HMRC have allowed easement of penalites?

This is a freeview 'At a glance' guide.

• Subscribers see Adviser's Tax Penalty Planner.

At a glance

Tax penalties apply for the late filing of Self Assessment (SA) tax returns and late payment of tax due under SA. There may also be penalties for failure to notify chargeability and for error if there is a mistake in a return.

Late filing: a key feature of the current regime is that the late filing penalty is not reduced if tax is paid on time, see Late filing a SA return: automatic penalties

Penalties for:

• Late payment
• Failure to notify
• Penalties: Errors in a return and documents

are all tax geared: if no tax is due or outstanding, no penalty applies.

Late filing penalties can be mixture of fixed-rate and tax geared penalties: it depends on your degree of lateness and tax liability.

Interest is charged on both unpaid tax and unpaid penalties.

The filing deadlines are: 

• 31 January after the tax year end if you are filing your tax return online, tax is due on/by the same date. 
• 31 October after the tax year end if you are filing a paper return, tax is due on/by the 31 January of the following year. 
• If a notice to complete a return has been issued after 31 October, the filing deadline and tax due date is 3 months after the date of the notice.

Late filing and payment: at a glance

* Subject to multi penalty rule para 17 schedule 55 FA 2009.

Late filing example:

Note: this example ignores any one-off easements such as for Covid-19 (see below). 

In January 2024 John goes to Australia on a sabbatical and accidentally forgets to file his 2022-23 Self Assessment tax return. This results in a fixed rate tax liability of £100.  He comes home and files his return on 1 February 2025. HMRC sends him notification of penalties as follows:

 *The penalties for being 6 months late and 12 months late are subject to the interaction rule in para 17(3) and taken together they should not exceed 100% of the tax due. See Grounds for Appeal: HMRC error or flaw. 

Late payment example:

Note: this example ignores any one-off easements such as for Covid-19 (see below).

Jane was due to make a balancing payment of £10,000 in Income Tax under Self Assessment for the 2022-23 tax year; it fell due for payment on 31 January 2024. She ignores the reminders and eventually pays her tax in February 2025.

If the tax was not paid penalties accrue as follows:

 Late payment: 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 suspension agreement is broken.

Special reduction

• HMRC has a statutory requirement to consider whether any special circumstances exist and if so it may override the statutory penalties and reduce them as it sees fit. See Appeals: Grounds for Appeal Toolkit

Appeal

• The taxpayer has 30 days to lodge an appeal with HMRC against a tax penalty. This was extended by three months for COVID-19 related delays for the 2019-20 tax year.
• A Late appeal may be accepted at the discretion of HMRC or the tribunal judge.

The legislation relevant to each type of penalty provides for the appeal process and it is advisable first off to ensure that any penalty charged has been made correctly according to the legislation.

HMRC will not challenge any late filing penalty appeal provided that there is a Reasonable excuse for late filing and that an appeal has been made.

Appealing a penalty can be far from straightforward as there are numerous grounds for appeal and technical arguments that can assist the taxpayer.

See:  How to appeal a tax penalty (subscriber version) or How to appeal a tax penalty (freeview).

Basis Period Reform

HMRC have announced that they will allow an extension to the 2023-24 tax return deadline for taxpayers affected by the Basis Period Reform. 

• HMRC have an online tool which allows taxpayers affected by the basis period reform to apply for details of overlap profits. 
• The deadline to apply for overlap profits was 31 January 2025. 
• HMRC have announced that taxpayers who applied for their overlap profits before the deadline but have not yet received a response can submit their return up to the 28 February 2025 without incurring a late penalty.
• If they have still not received a response from HMRC an  estiamted figure should be entered and the return should be submitted by the 28 February. 
• Once actual overlap profits are known, an amendment should be submitted. 

See: Late Filing Penalty Easement for 2023-24

 Post Office Horizon Scandal Compensation 

• HMRC has confirmed that postmasters who have not received a top-up payment and tax advice grant from the Post Office in time to file their return and pay their tax by 31 January 2024 will be able to claim that they have a reasonable excuse for filing their returns or paying their tax late.
• HMRC has a deadicate support team who can advise further on the tax status of compensation payments.

See: Post Office Horizon Compensation & Tax

Penalties and COVID-19 

2019-20

HMRC confirmed that:

• Returns for 2019-20 may be filed late: up to 28 February 2021 without incurring a penalty.
• In a separate announcement, they confirmed that Self Assessment taxpayers would not be charged the usual 5% late payment penalty provided that they paid their tax or set up a payment plan by 1 April 2021.
• They will allow appeals to be made up to three months late as a result of COVID-19 being a reasonable excuse for the compliance failure. 

See:  COVID-19: Tax appeals deadline.

2020-21

HMRC confirmed that:

• Returns for 2020-21 may be filed late: up to 28 February 2022 without incurring a penalty.
• Self Assessment taxpayers would not be charged the usual 5% late payment penalty provided that they paid their tax or set up a payment plan by 1 April 2022.

See:  30-day penalty waiver for 2020-21 tax return filing & payment

Daily penalties: developments

• See:  Penalties: Late Payment
• See: How to appeal a tax penalty for detailed guidance and hints and tips.

Small print

The legislation is found in Schedule 24 FA 2007, Schedule 41 FA 2008 and Schedules 55 and 56 FA 2009.