Today, 1 May, is the deadline for late filing of HM Revenue and Customs (HMRC) tax returns, meaning anyone who hasn’t filed their self-assessment return for the 2022/2023 tax year now faces a hefty £10 daily penalty, which can add hundreds of pounds to their overdue tax bill.
This is on top of other fines received for missing the original January deadline for filing tax returns, which more than a million people missed this year, earning them an immediate fine of £100.
The vast majority of late filers have already paid HMRC their fair share, but it’s not just the penalties that can accrue when filing your tax returns. Understanding why your tax bill may have extra charges isn’t always easy, as penalties apply for errors and mistakes, as well as for returning forms late.
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Financial expert John Clemming of For credit offers some practical advice on how to avoid hefty fines. It then explains the four main ways to breach HMRC’s rules on tax returns.
Filing your tax return late
John said: “One of the most direct penalties from HMRC comes from failing to file your tax return on time.
“Deadlines are usually clear: 31 January for online returns and 31 October for paper returns for the previous tax year. If you miss this deadline, you’ll immediately incur a £100 penalty. If your return is more than three months late, additional charges of £10 per day can accrue, up to a maximum of £900 over 90 days.”
Paying your taxes late
John added: “Similarly, failure to pay the tax owed on the due date carries penalties.
“Late payment incurs an initial penalty of 5 percent of the taxes owed if you are 30 days late, another 5 percent if you are six months late, and an additional 5 percent if you are 12 months late. These penalties can substantially increase the amount owed, so it is essential to plan your finances accordingly.”
Penalties for inaccuracy
John said: “HMRC imposes penalties for errors in tax returns or documents that underestimate your tax liability.
“These penalties depend on whether HMRC considers the inaccuracies to be careless, deliberate or deliberate and concealed. Penalties can range from 0 per cent to 100 per cent of unpaid tax in serious cases, highlighting the importance of accurate and honest reporting.”
Lack of notification
John warned: “If your tax situation changes and you don’t inform HMRC, you could face a ‘failure to notify’ penalty.”
“This situation usually occurs when individuals or businesses are required to register for VAT or self-assessment but fail to do so on time. Penalties are calculated in a similar way to inaccuracies and can be just as severe, depending on the amount of tax owed and how long the non-compliance has lasted.”
