Don't Keep the Taxman Waiting

Monday February 24, 2020

No one likes to be stood up, and a date with HMRC is one you really don't want to miss. Every year, thousands of people get a penalty slapped in their faces for missing the 31st of January Self Assessment deadline, and with a minimum of £100 at stake, it's an eye-watering mistake to make.

So, suppose you've overslept or whatever and left HMRC hanging. Here's what you've got to look forward to in terms of the taxman's cold shoulder:

  • Missing the filing/payment deadline on the 31st of January: £100
  • Leaving it for another 3 months, from 01 May: £10 per day, up to £900 (£1000)
  • Still haven't done it after 6 months, from 01 August: £300 or 5% of what you owe (whichever's worse) (£1300)
  • A year past the deadline without sorting it out: Another £300 or 5% of the tax owed (£1600 or more…)

Keep in mind that these figures are assuming that the taxman's giving you the benefit of the doubt. He believes you're basically on the level and aren't deliberately hiding your earnings from him. After a year, though, you'd forgive him for getting a little suspicious.

For instance, if you're 12 months late with your filing or payment, but you're not sneaking around behind HMRC's back about it, then you can expect a penalty of another £300 or 70% of what you owe – again, whichever's higher. On the other hand, if the taxman's got it into his head that you've been trying to hide your cash from him, then the penalty will be the greater of either another £300 or 100% of the tax owed.

Having said all that, HMRC do understand that circumstances can get out of your hands sometimes. In fact, they've got rules that say they have to consider whether your missed deadlines were unavoidable - or even not your fault at all. You'd have to have a pretty solid excuse, though, and there aren't too many of those floating around to latch onto.

Even if they don't accept your excuse, there's still a chance you could appeal against the penalties. Again, though, you'd need some firm footing if you were hoping to get off altogether. The appeals process is neither simple nor fun, of course, so really your best course of action will always be never to miss the deadlines at all.

Of course, letting a key Self Assessment date slide by without action isn't the only way to find HMRC pulling its “jealous ex” routine on you. In fact, there's a range of ways you can trip yourself headlong into a steaming pile of penalties. If you're running a Limited Company, for instance, you've got a whole extra set of deadlines to watch out for. In addition to any Self Assessment tax returns you've got to file, you'll also need to submit your annual accounts to Companies House. Here are the key dates to keep an eye on:

  • Your first accounts with Companies House: must be filed within 21 months after your business was registered, and then annually, within 9 months from each company year end..
  • Pay any Corporation Tax you owe, or explain that you don't owe any: 9 months and a day after your Corporation Tax “accounting period” ends.

As with Self Assessment, missing the deadline for your annual accounts is bad news. How bad depends entirely on how late you leave it – but keep in mind that these penalties double if your previous year's accounts were late as well!

  • Up to a month late: £150 penalty
  • 1-3 months: £375 penalty
  • 3-6 months: £750 penalty
  • Over 6 months: £1,500 penalty

If you do find yourself in hot water with HMRC over a delayed filing or payment, don't bury your head in the sand and hope the problem will go away. Instead, pick up the phone and call RIFT. We've got a great relationship with the taxman, and in many cases we can help reduce or even eliminate the penalties. Better yet, if you're already with RIFT then you'll never get into this kind of mess in the first place. With us on your team, we can make sure you never miss a deadline, a payment or a golden opportunity.

It only takes an email or phone call to get your business rolling with the UK's leading tax experts, so get in touch. In the meantime, mark your calendars, file your tax returns and listen out for more Voices from the RIFT...



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