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December 31st 2018

Self Assessment - the penalty regime

Self Assessment taxpayers who file their returns late or pay their tax bills late may face additional penalties and interest charges.

Taxpayers who are required to file a Self Assessment return receive a £100 penalty if the return is up to three months late. For returns outstanding for more than three months, an additional daily penalty of £10 per day applies, for up to 90 days. For returns that are six months late, a further penalty of 5% of the tax due applies, or £300 if greater*. If the return is more than 12 months overdue, a further 5%/ £300* penalty applies, though in some circumstances - where the taxpayer has deliberately withheld information - HMRC can levy a penalty of as much as 100% of the tax due.

Taxpayers who do not pay their Self Assessment tax on time are subject to penalties of 5% of the tax due and outstanding 30 days, six and 12 months after the due date. Interest is also chargeable on amounts due but not paid by the due date, and on unpaid penalties.

Where the taxpayer enters into a "time to pay" agreement with HMRC, the late payment penalties are suspended provided that the agreement is adhered to.

Taxpayers have 30 days to lodge an appeal with HMRC against a tax penalty; where there is a "reasonable excuse" for non-compliance the appeal should be accepted. HMRC has published guidance on a range of different circumstances which it considers might give rise to a "reasonable excuse".

* taken together these penalties may not exceed 100% of the tax due.

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