What happens if I am late filing my self-assessment tax return?

Last year over 700,000 people were late in filing their tax return with HMRC, with similar numbers expected to miss the 31st January self-assessment deadline this year.

Failing to file your tax return on time leads to HMRC imposing a range of penalties and charges on your account, starting from the very moment your return is late. An initial £100 penalty is issued as soon as the clock strikes midnight unless you have a ‘reasonable excuse’ for non-filing. Charges will then continue to accrue until you rectify your mistake and bring your account up to date.

What are the fines for late submission of your self-assessment tax return?

If you miss the deadline by more than three months, you'll start racking up a daily penalty of £10 for each day your tax return remains late, up to a maximum of £900, with there are further penalties at six and 12 months. Fines can add up to in excess of £1,600 in the first 12 months of late filing so it is vitally important you make submitting your tax return a priority.

HMRC fines for late filing of your self-assessment tax return are as follows:

• One day late – An immediate £100 fine
• Up to three months late – You will be charged £10 for each day your return remains late; this is capped at a maximum of 90 days. When taking the initial £100 fine into account, this could result in a penalty of £1,000 in just three months
• Six months late – An additional fine of £300 or 5% of the tax due (whichever amount is higher) will then be levied on top of the penalties which have already been accrued
• 12 months late – Another £300 or 5% penalty will be added to your balance. At this stage HMRC will be losing patience and in some instances you could face an even greater fine, up to 100% of the tax you owe in the most serious instances

So long as you are not perpetually late in submitting information to HMRC, if you bring your account up to date - which means submitting your return along with paying any tax due as well as any penalties you have been charged - HMRC will be satisfied and you can carry on as normal.

Penalties for late or non-payment

It is not just filing your tax return late which could result in you being hit with charges; failing to pay the tax you owe on time is also likely to land you in hot water with HMRC.

Any owed tax must be paid by 31st January following the end of the tax year. HMRC will charge interest on late payments, currently at a rate of 3.25%. After 30 days you will be fined 5% of the outstanding amount, with a further 5% penalty being levied after 6 months. Should your tax remain unpaid after 12 months, another 5% fine will be added to the penalties already imposed on your account.

How an accountant can help

Your tax return is something that needs to be done, and it is in your best interest to get this sorted ahead of the deadline in future years. If you are struggling to manage your accounting requirements alongside running your company, you should seriously consider employing the services of an accountant to handle this side of your business on your behalf.

Not only can handing over your self-assessment duties to an accountant see you avoiding late and incorrect filing penalties, it can also save you considerable time and effort which you could use more productively in your business, generating and completing more work rather than spending it completing paperwork.

So while an accountant will come with a cost, this is more often than not money well spent; indeed a good accountant could actually end up saving you more than they are costing you. From checking that you are not under claiming expenses, through to ensuring you are taking advantage any appropriate tax relief schemes, having an accountant on board can be extremely beneficially to many SMEs and sole trader businesses.

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