The taxman is on the ball when it comes to penalties for missed Self Assessment submissions and tax payment deadlines. And the only guaranteed way of avoiding these is to meet the published timetable. However, there are unfortunate circumstances that can cause you to miss a deadline. So, what can you do to avoid paying more than you have to if you find yourself in that position?
That’ll be £100, thank you very much
If you’ve just missed the deadline for completing your 2014/15 online Self Assessment tax return (it was 31 January), then you’ll receive an automatic penalty of £100. This fine isn’t usually negotiable unless you have a reasonable excuse, which we’ll go onto later.
Then, there’s the 3% interest charge
So, not only will you receive an automatic bill for £100, but you’ll also get a 3% per annum interest charge slapped onto your outstanding balance for as long as it remains unpaid. However, if you sort it all out by 1 March 2016, HMRC won’t punish you further.
And, a 5% flat-rate penalty
If after 1 March you still haven’t paid your tax or Class 4 National Insurance contributions balance for 2014/15, you’ll receive a flat rate penalty of 5% of what’s due. The flat rate penalty applies only to the 2014/15 part of the balance, and not to a 2015/16 payment on account amount – however, the 3% interest charge will.
Do you have a reasonable excuse?
HMRC gives a list of circumstances that it may consider a reasonable excuse for having missed a tax obligation. These are:
- your partner or another close relative died shortly before the tax return or payment deadline
- you had an unexpected stay in hospital that prevented you from dealing with your tax affairs
- you had a serious or life-threatening illness
- your computer or software failed just before or while you were preparing your online return
- service issues with HMRC online services
- a fire, flood or theft prevented you from completing your tax return
- postal delays that you couldn’t have predicted.
They may expect you to prove that the unfortunate event did happen to you and that you’ll send your return or payment as soon you have things resolved.
HMRC also give a list of excuses they WON’T accept:
- you relied on someone else to send your return and they didn’t
- your cheque bounced or payment failed because you didn’t have enough money
- you found the HMRC online system too difficult to use
- you didn’t get a reminder from HMRC
Paying HMRC some of what you owe them
It’s worth remembering that you can ask HMRC to allocate payments however you’d like, even if you owe money from previous years. So, if you can only pay part of your tax bill, ask HMRC to allocate the amount you owe to your 2014/15 balance; doing this will reduce the interest charge and the flat-rate penalty on the amount you owe for the most recent tax year.
You should contact HMRC by phone or in writing to request this.
If you’ve made a change to your tax return
So, if you did manage to get your tax return in on time, but then made an amendment which has increased your bill, then the extra tax is payable 30 days after the amendment, even if the date comes after 31 January 2016. However, you should still pay the original amount by the due date.
Struggling to pay?
If you’re in a position where you don’t have a reasonable excuse for not returning your tax return on time or paying your 2014/15 tax bill, you could contact HMRC’s Business Payment Support Service to arrange a payment plan. If you do this quickly, usually within 14 days of the deadline, there’s a high chance that HMRC will waive the 5% flat-rate penalty. You can contact HMRC Business Payment Support Service on 0300 200 3835.