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Late Submission of Your Tax Self-Assessment: A Costly Mistake

Late Submission of Your Tax Self-Assessment: A Costly Mistake

If you’re someone who missed the 31st January deadline for tax self-assessment, it could be painful for you financially. The following outlines the penalties that will be imposed on you if you delay submitting your assessment any further. This article is relevant to takers of the CII AF1, AF5, CF1, R01, R03, R04, and R06 exams.


So January, the longest month of the year (!) is finally over and with it the deadline for completing self-assessment on time for the tax year 2018/19.

According to HMRC, 750,000 taxpayers missed the deadline last year, and some recent reports suggest that this year, the figure is closer to 1m.  So, what are the consequences for those who have just missed this year’s deadline?

The Consequences of Missing the Deadline

The first thing that happens is a £100 fine.  If a tax return is not submitted within the next 3 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.  Same again 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. Penalties are also charged if tax remains unpaid after certain time periods after the balancing payment is due on the 31st January – so for 2018/19, a 5% penalty will be charged in March 2020, again in August 2020 and again by February 2021 if the tax still remains unpaid by then.  These penalties are all on top of the interest.

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

Help Offered and Reasonable Excuses Accepted

HMRC do produce a pretty good guide on how to fill in a tax return, and their helpline does offer tax advice and help with filling it in.  They will also accept ‘reasonable excuses’ for being late, which could avoid the £100 fine.  These include hospital confinement, death of a partner or fire.  Not surprisingly, they do not accept the old favourite ‘homework late’ excuse of ‘the dog ate it’.

For anyone who is having difficulty paying the tax they owe, then HMRC is becoming more open to helping those in financial difficulty by agreeing to defer the payments or pay in instalments.  The key thing is to get in touch with HMRC as soon as possible.

If a mistake is made on a tax return and it needs changing, then it can be put right within 12 months of the filing date, but if it’s any later than this, it will need to be put in writing.  For the 2018/19 tax year, changes will need to be made by 31st January 2021. Changes to earlier tax years will need to be put in writing to HMRC.

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Penalties for Errors

If a tax return is submitted that contains a mistake, HMRC will charge a penalty if the error is:

  • because of a lack of reasonable care – between 0% and 30% of the extra tax due
  • deliberate such as intentionally sending incorrect information – between 20% and 70% of the extra tax due
  • deliberate and concealed, for example, intentionally sending incorrect information and taking steps to hide the error – between 30% and 100% of the extra tax due

The amount of penalty is linked to the reason why the mistake happened – the more serious the reason, the higher the maximum penalty.  However, HMRC can reduce the penalty if the taxpayer helps them to put things right.

Grab the resources you need!

If you’re studying for your CII R03 exam, and you’re wanting an edge in your preparation for the exam, grab our free taster paper to try out one of Brand Financial Training’s resources for yourself.  Click the link to download the R03 mock paper taster now!

Click here to download our free taster mock paper for CII R03

Alternatively, you can download taster resources for AF1, AF5 CF1, R01, R04, or R06 if one of those exams is stressing you out.