With personal tax season upon us, now is a good time to revisit HMRC’s updated penalty regime for people who do not submit their Self Assessment on time. The Finance Act 2009 brought in sweeping changes to the way tax penalties are administered, and for the first time allows HMRC to punish those who submit returns late even if they do not owe any tax!

The initial penalty of £100 is applied instantly if you are registered to complete a Self Assessment and do not file it online by midnight on January 31st.

This new instant penalty has not been without its problems – last year HMRC mistakenly issued some 17,000 incorrect late filing penalties.

If you delay further the penalties increase accordingly. Fail to submit your Self Assessment for another three months and you will begin to accrue additional fines of £10 per day for up to 90 days.

If HMRC are still waiting for your return after six months you will be subjected to a further penalty of £300 or 5% of the tax owed – whichever is greater. The same penalty will be applied again after twelve months.

All this means that if you are twelve months late submitting your Self Assessment you will owe HMRC a minimum of £1,600 in penalties on top of your tax bill.

HMRC has additional powers to punish freelancers or contractors it believe are intentionally withholding tax or attempting to conceal their full liabilities. These naughty individuals can be fined up to 100% of their tax bill, in addition to their late filing penalties.

Do I have to complete a Self Assessment?

All directors of a limited company must complete a Self Assessment, so if you are a Crunch client you must complete one!

We can handle it

We offer a full Self Assessment service for all clients, priced on a sliding scale from £75 depending on the complexities of your finances. Send your account manager an email to get started!

I missed the registration deadline!

The registration deadline for Self Assessment was on October 5th, and there are penalties for non-disclosure if you failed to register in time. However, in instances where you register late but still submit your Self Assessment on time it is possible to reduce this penalty, and sometimes eliminate it entirely.

If you need to register for Self Assessment (or if you’re not sure if you need to for the 2011-2012 tax year) get in touch with your account manager.

Photo by Erik Fitzpatrick