No one likes to get a penalty charge, have you ever got back to your car to see that little yellow notice stuck to the windscreen. That feeling of spending money and feeling like you’re not getting anything in return for it can be very upsetting.

For all those who have to file Tax Returns electronically the due date of January 31st is a very important day. Miss this deadline and the initial penalty is £100! (I can think of a lot of other things I would like to spend £100 on). You may have noticed a key word in the last sentence ...Initial....Believe it or not the penalty can be more!

If a tax return is filed late, but not more than 3 months late, the penalty is £100. If the return is more than 3 months late, filed on or after 1st May, an additional £10 per day is charged. In addition to this interest and penalties will be charged on late payment of tax.

Let’s put this into a couple of examples. We will assume Jack pays his tax at the same time as submitting his return.

Example 1 – Jack files his tax return for the year ended 5th April 2017 on 1st February 2018, one day late. His tax bill for this return is £1,500. What will he be charged in interest and penalties?

Late filing penalty        - £100

Interest for late payment     - £NIL

Penalty for late payment of tax - £NIL

Total charge for paying late      £100.00

Example 2 – Jack files his tax return for the year ended 5th April 2017 on 1st May 2018. His tax bill for this return is £1,500. What will he be charged in interest and penalties?

Late filing penalty       - £110

Interest for late payment    - £10.06

Penalty for late payment of tax   - £75.00

Total charge for paying late          £195.06

Example 3 – Jack files his tax return for the year ended 5th April 2017 on 1st August 2018. His tax bill is still £1,500. What will he be charged in interest and penalties this time?

Late filing penalty        - £1300.00

Interest for late payment     - £20.46

Penalty for late payment of tax - £150.00

Total charge for paying late       £1470.46

Looking at these examples you might wonder, why would anyone leave it 6 months? Unfortunately once the deadline is missed it can become a more daunting prospect to file the return, and with each letter and demand it can seem even more daunting. The best advice is to get those returns filed on time, don’t make a costly mistake.

If you would like to discuss how I can help you with filing tax returns, including overdue returns, please send me an e-mail or give me a call.