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Tax returns are a fact of life – like paying rent, council tax, and utility bills. However, if you’re just starting out in the world of self-employment, then you may not understand just how important tax returns are. 

Failing to complete a tax return can have negative consequences, including fines. It’s important to be clear on the deadlines and the fines that you may incur for failing to complete and pay tax returns in a timely manner. 

Don’t worry – we’ve got you covered. Keep reading to learn more about tax returns and the consequences for failing to file them on time, and for failing to pay your tax bill on time.

Filing Your Tax Return Late 

Filing your tax return should be considered a priority, even if you don’t believe you owe any tax. 

There are strict deadlines when filing tax returns, and if HMRC doesn’t have your completed tax return by the required date, then you’ll incur fines that get bigger and bigger the longer you wait. 

HMRC needs your tax return by the 31st of October if it’s a paper return, but it’s a little later for online submissions – the 31st of January. 

If you don’t reach this deadline, you’ll be automatically charged a £100 fine – even if it’s just a day late. 

However, if it’s up to three months late, you’ll incur an additional £10 charge for each day that the tax return hasn’t been completed, up to a maximum of £1000. 

If you still haven’t completed your tax return within six months, then you’ll be charged either £300 or 5% of the value of the tax due – depending on which is higher. This charge doesn’t include the above charges. 

For tax returns that are a year late, you’ll be charged all of the above plus an additional £300 fine, or 5% of the tax due. However, you may be charged £100 of the tax due on top of the whole amount of tax, as well as the penalties listed above.

However, if you have a valid reason for failing to complete your tax return, you can appeal the fines by writing to HMRC with your information and reason for failing to complete the tax return. Some valid reasons include bereavement, serious illness, or major life events. 

These fines can be avoided by simply filing your tax return on time – if you’re not sure what to do, you can get advice from an accountant, hire an accountant to sort the return for you or learn how to complete it yourself.

If you work from home, you may be eligible for tax relief. Click here for more information!

Do I Still Need To File a Tax Return If I Don’t Owe Tax?

If you don’t think that you owe any tax, don’t make the mistake of failing to complete and submit your tax return. 

Even if you don’t owe tax, you still need to complete your tax return to prove to HMRC that you don’t owe any tax. You’ll still receive penalties if you don’t complete your tax return on time.

Not Paying Your Tax Bill On Time

Filing your tax return on time is one thing, but it’s equally as important to pay your bill on time. Failing to do so will result in fines, so it’s always best to get it done as soon as possible before the deadline. 

The deadline for paying your tax return is also the 31st of January, which is the same as the online filing deadline.

However, the fine process is slightly different regarding the actual bill as opposed to the return. You’ll get charged for paying your bill late as well as filing your tax return late. 

You’ll be charged interest from the deadline, which is currently 3.25% – but this is liable to change. 

If you still haven’t paid your bill 30 days after the deadline, then you’ll receive a charge that equals 5% of the tax owed – and after six months, you’ll receive the existing penalty charge as well as an extra 5% of the tax owed.

Can I Appeal?

You can appeal any charges if you have a valid reason to do so. If something out of your control has occurred that means that you couldn’t file your tax return on time or pay your tax bill on time, then you may have grounds for appeal. 

You’ll need to write HMRC including your information and why you failed to complete your tax return or pay your tax bill on time. 

However, it will only be accepted if HMRC considers it a reasonable excuse. A reasonable excuse can involve postal delays out of your control, technology failing on the day you were supposed to fill in the tax return, a death in the family, serious illness, or other major life events.

If you’re a small business, click here for our guide to corporation tax.