Blick Rothenberg

Travelling the world, trying to escape from a foreign intelligence agency is no excuse not to file your tax return on time

05.01.2015

Filed Under: UK Business

Written by: Nimesh Shah

If you don’t get your tax return in on time and pay the money that is owed, it could cost you nearly half as much again...

HMRC have today revealed the top ten most terrible excuses that people have come up with for not filing their tax return on time. These include my pet dog ate my tax return (and all the reminders) and I’ve been busy looking after a flock of escaped parrots and some fox cubs.
 
“Whilst HMRC’s release offered some tongue-in-cheek excuses for failing to file a tax return on time, there is a serious message for people who haven’t yet filed their tax return,” said Nimesh Shah, Partner.
 
“The fact is that many people don’t realize how quickly they can rack up penalties and interest if they don’t file their tax return on time and make the necessary tax payments.”
 
“If you don’t file your tax return by 31st January, HMRC will issue an automatic fixed penalty of £100. If the tax return is three months late, HMRC will start charging daily penalties of £10 per day and these run for a period of up to 90 days, so up to £900 in total. After 6 months, HMRC will charge a penalty of 5% of the person’s tax or £300 – whichever is higher. Therefore, within 6 months, you could be facing total penalties of at least £1,300. The penalties start to become even more serious if your tax return is more than 12 months late and can be as much as 200% of the tax. HMRC will charge these penalties even if you don’t actually have any tax to pay.”
 
Nimesh added: “In addition, if you don’t pay your tax on time, HMRC will charge daily interest at 3% (which is relatively high compared to bank interest rates).  Furthermore, if you don’t pay the tax by 2nd March, HMRC will charge a penalty of 5% of the tax and further 5% penalties are levied if the tax is unpaid at 6 months and 12 months.
 
“If someone doesn’t file their tax return until 1st June and they calculate they have to tax to pay of £1,000, they could be facing an additional bill of penalties and interest of just less than £500, which is nearly as half as much of the tax owed in the first place.”
 
Nimesh said that HMRC would always allow for legitimate occasions where a person cannot file their tax return on time.  If a taxpayer has a ‘reasonable excuse’ HMRC can, at their discretion, accept the late filing of a tax return. 
 
He added: “‘Reasonable excuse’ is not specifically defined in law and a HMRC officer would look at each case on its own facts. In our experience, it is rare HMRC will extend the deadline, but a sensible example may include serious illness or family bereavement.”
 
“Whilst filing a tax return isn’t at the top of everyone’s New Year agenda, the costs of not getting it in on time can leave a significant bill.”

For more information, please contact Nimesh Shah at nimesh.shah@blickrothenberg.com.