A guide to HMRC tax penalties

Tax return

A guide to HMRC tax penalties

Tax inaccuracies and missed deadlines can lead to companies having a high price to pay.

In this blog post, we take a look at HMRC tax penalties in further detail.

Late tax returns

One of the main reasons why people find themselves facing a fine is because they file their tax return late. HMRC aren’t going to make allowances for you being unorganised. However, they do state that the following are potential reasonable excuses they may accept:

• Postal delays that could not have been predicted
• An unexpected hospital stay that prevented you from dealing with your tax affairs
• Service issues with HMRC online services
• Your partner died close to the payment/return deadline
• A fire prevented you from doing your tax return
• Your computer failed during/before filing your online return

The penalties in place for missing the submission deadline…

Self-assessment: You will get a penalty of £100 for the first three months of late submission and payment. After this, additional charges apply.

Payroll: You will be subject to interest charges if you do not pay by the 22nd of every month. There is a yearly penalty depending on how many employees you have, e.g. £100 for those with nine or fewer employees.

VAT: You will be subject to a surcharge if you pay late, which depends on your turnover. If your turnover is more than £150,000 and you have defaulted for the 5th time, you will have to pay 15 per cent or £30, depending on what is more.

Errors on returns, paperwork and payments

If this has been done deliberately, you will be subject to a large fine. If you have done this unintentionally, you still may face a penalty if HMRC decides you acted with a lack of ‘reasonable care’. This typically means that you have not kept your files and records up to date.

The penalties in place for errors…

• Errors as a result of a lack of reasonable care: Between 0 and 30 per cent of the extra tax due
• Deliberate errors: Between 20 and 70 per cent of the extra tax owed
• Deliberate and concealed errors: Between 30 and 100 per cent of the extra tax due

To ensure you don’t face any fines, leave your accountancy commitments in safe hands with SQK Accountancy.

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