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TDQ: Self-Assessment: Timescales and Fines

8 December 2019

Self-assessment dates and fines imposed may seem like a fairly straightforward piece of knowledge but that is why they are often forgotten and exam marks are lost, says Catriona Standingford, managing director, Brand Financial training. Exams include the CII’s R03 and AF1

As the end of 2019 looms, many will be aware of the impending end of January deadline for those that return their tax return online.  The filing date is the 31 January following the tax year so 31 January 2020 relates to tax year 2018/19.

There are three relevant payment dates; two payments on account (31 January in the tax year and 31 July after the end of the tax year) and one balancing payment due the following 31 January.

So for the tax year 2018/19 the payment dates would be:

  • 31 January 2019 (first payment on account)
  • 31 July 2019 (second payment on account)
  • 31 January 2020 (balancing payment for 2018/19 AND first payment on account for 2019/20 plus, where applicable, class 2 National Insurance Contributions and any capital gains tax).

According to HMRC 700,000 taxpayers missed the deadline in January 2019 to file their tax return for the 2017/18 tax year.

There are of course consequences; the first is a £100 fine.  If the return is not submitted within the next three months, a £10 daily penalty is charged for a maximum of 90 days – that’s potentially another £900 on top of the fine.  Even if the taxpayer doesn’t actually owe any tax these fines still apply.  If the return still doesn’t appear 6 months later there’s a further penalty of either £300 or 5% of the outstanding amount of tax, whichever is the higher.  The same happens if the tax return is more than 12 months late.

As for the tax payment itself, interest is automatically charged on late and underpayments.

As mentioned, penalties are charged if tax remains unpaid after certain time periods after the balancing payment is due on the 31 January – so for 2018/19 a 5% penalty will be charged on the 2 March 2020, again on 1 August 2020 and again on 1 February 2021 if the tax still remains unpaid by then.

Interest is also levied if a claim is made to reduce payment on accounts which later turn out to be unjustified, and penalties are also incurred for failing to keep records and documents needed to fill in a tax return.

Reasonable excuses

These are the published penalties but HMRC does appear to be taking a kinder stance if the individual has a ‘reasonable excuse’ for a return or payment being late.

Examples HMRC give as ‘reasonable excuses’ include:

  • a partner or close relative dies shortly before the return or payment deadline
  • an unexpected hospital stay
  • a serious or life threatening illness
  • computer or software failure just before or whilst preparing an online return
  • service issues with HMRC online
  • fire, flood or theft
  • postal delays that couldn’t have been predicted
  • delays related to a disability.

The return or payment must be sent as soon as possible after the ‘reasonable excuse’ is resolved.

What won’t count as a ‘reasonable excuse’ include:

  • reliance on someone else to send in a return who failed to do so
  • a bounced cheque or payment failure because of insufficient funds
  • the HMRC online system was too difficult to use
  • no reminder from HMRC
  • a mistake was made on the return.

And definitely not these (although these are the funniest excuses revealed by HMRC):

  • ‘I’m too short to reach the postbox’
  • ‘My boiler broke down and my fingers were too cold to type’

According to HMRC 93.68% of self- assessment tax returns were completed by the midnight deadline on 31 January 2019. However, those 700,000 who missed it may now be regretting not getting on top of it in time.

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