Despite a record 10.8 million people filing their tax returns by midnight on 31 January 2017, including nearly 33,000 who filed online in the last hour, 840,000 now run the risk of a penalty for failing to meet the filing deadline for 2015/16.
Penalties are charged by HMRC for tax returns which are filed late. If your return is late by:
1 day – a penalty of £100 will be charged.
3 months – a penalty of £10 a day is charged, up to £900.
6 months – a penalty of £300 or 5% of the amount of tax due from a determination or 5% of the amount of tax shown on the tax return, whichever is greater.
12 months – a penalty is calculated based on the same basis as the 6 month penalty.
Interest is charged by HMRC if the late penalty is not paid within 30 days after the issue of the penalty assessment.
Determinations are raised by HMRC in the continued absence of completed tax returns. More information on determinations is available here.
HMRC will only accept an appeal if a reasonable excuse exists to explain the failure to file on time.
There are no hard and fast rules on what a reasonable excuse looks like. It may involve some sort of technical error by HMRC, such as the failure to issue an online Activation Code or something more personal, such as illness or even the death of a relative or partner. HMRC should examine each case on its own facts and merits.
As a general rule of thumb, appeals tend to have a higher prospect of success if they are supported by documentary evidence. For example if business records have been lost in a fire or flood, the provision of an insurance claim, perhaps supported by a police report, will increase the chances of a successful appeal.
Further guidance is available in this HMRC factsheet.
Author: Guy Smith, Head of Technical Research