Know about tax penalties

There are some important dates during each year when you must:

• Send in your tax return; and
• Make payments.

You will be liable to a penalty if you fail to follow the prescribed dates. It is essential that you must be aware of those dates in order to avoid the penalty.

Consequences of failure
If you miss the key dates you may have to pay interest and penalties .If you miss the deadline, the longer you delay, the more you will have to pay. Therefore, it is imperative to send your tax return to HM Revenue & Customs (HMRC) as soon as you can.

The late tax penalties are as follows:

• 1 day late
  A fixed penalty of £100. This applies even if you have no tax to pay or have paid the tax you owe
• 3 months late
  £10 for each following day – up to a 90 day maximum of £900. This is as well as the fixed penalty above.
• 6 months late
  £300 or 5% of the tax due whichever is the higher. This is as well as the penalties above
• 12 months late
  £300 or 5% of the tax due, whichever is the higher. In serious cases you may be asked to pay up to 100% of the tax due instead. These are as well as the penalties above.

Immunity from penalties
The imposed penalty can be set aside if you have a justifiable plea for missing the deadline. For example, there may have been an exceptional or unexpected event, beyond your control, that meant you could not send your return on time. In this case, you must send your return as soon as possible once the problem ends.

Reasonable excuses
There are no hard and fast rules, but some examples of what HMRC may consider a reasonable excuse are:

• documents lost through theft, fire or flood that you can’t replace in time
• life-threatening illness, for example a heart attack that prevents you dealing with your tax affairs
• death of a partner shortly before the deadline
• industrial action by Royal Mail over a lengthy period of time
• issues with the online service, with no work-round – you’ll need to provide the error message you received

You have a right to apply to HMRC for reconsidering the imposed penalty because of the reasonable valid ground. HMRC will consider and examine the information carefully to know whether you have a reasonable excuse or not.

You should intimate HMRC as soon as possible – do not wait until you receive the penalty. You should write to HMRC with:

• your name and Unique Taxpayer Reference – you’ll find this on your tax return or statement
• the date you sent your return
• the reason why the return was late

HMRC cannot accept this information over the telephone.

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