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If you don’t file or pay your self-assessment on time, or if you make mistakes on your tax return, HMRC can charge you penalties. These can cause cash flow problems and make HMRC take notice of your business. There are penalties for various offences under self-assessment, and you may be able to appeal if you feel you have been unfairly penalised. The following are some of the more common questions of penalties and the current penalty rate for each.
You must notify HMRC of any taxes you owe if you have started a new business or did not file a tax return last year. Penalties may be given for noncompliance or late notification. The penalty will depend on the amount of tax payable, as well as whether HMRC believes that your noncompliance was intentional or not.
If your tax return is more than three months late, you will be charged a penalty of £100. Following this, HMRC may impose a £10 daily penalty for up to 90 days, or £900, depending on the circumstances. You’ll have to pay 5% of the tax owed at the six-month mark, or £300, whichever is more. Except in cases where a Time to Pay arrangement has been negotiated with HMRC, the penalty for late payment is 5% of the total tax owed.
One or more of the following would constitute a reasonable excuse:
- You were hospitalised unexpectedly.
- You were diagnosed with a severe/life-threatening disease.
- Loss of a spouse or close relative
- Your computer crashed, or the HMRC website was down while filing your tax return.
Any penalties incurred for submitting or paying late will likely stand unless the underlying cause for the delay persisted throughout the late period. Not understanding how the online self-assessment system functions or not getting a notice to file from HMRC are “unreasonable” justifications.
For £100 penalties, the appeal must be made to HMRC within 30 days of the penalty notice. To appeal a late filing or late payment penalty of more than £100, use Form SA370 (or SA371 for partnership tax returns). You can also appeal over the phone, but if HMRC does not withdraw the penalty, you must provide it in writing. The decision to accept an appeal made after the 30-day deadline rests solely with HMRC. HMRC will notify you in writing of the outcome of your appeal; if successful, you will get a refund of the penalty plus interest. If your appeal is denied, you can have your case reviewed by a different HMRC official using their review system. This might be useful if you need to offer more information or documentation concerning the circumstances that led to your late filing or payment. The First Tier Tribunal (Tax) is another option for appeal; you can submit a written appeal or attend in person before the tribunal to present your case.
It is possible to contact HMRC and have the notice to file a tax return withdrawn if you have received a self assessment penalty but are not self-employed. It’s important to make this request no later than two years after the conclusion of the tax year. You may be able to “set aside” the penalty if you receive all of your income through PAYE (less than £100,000), if the income is taxed savings income, or if you had no taxable income that year.
Yes you can estimate your penalties by viviting the following link.
If you are self-employed and have received the notice of penalty from HMRC, for late filing or late payment of self-assessment tax, call our number right now at 0800 135 7323 to book an appointment with a specialist Tax Accountant.