HMRC penalties Personal Tax Return Personal tax return deadlines: 31 October for a paper tax return. 31 January for an online tax return. If the Personal Tax Return is late you will have to pay the penalties shown below: Length of delay Penalty 1 day late 100, regardless if you do not owe tax or have paid the tax you owe. 3 months late 10 for each day up to a 90 day maximum of 900. As well as the 100 fixed penalty above. 6 months late 300 or 5% of the tax due, whichever is higher, as well as the penalties mentioned above. 12 months late 300 or 5% of the tax due, whichever is the higher. In serious cases you may be asked to pay up to 100% of the tax due instead. These are as well as the penalties above. Penalties for paying tax late If you don t pay the tax you owe for the previous tax year on time you will be subject to the following penalties: Length of delay Penalty 30 days late 5% of the tax you owe at that date. 6 months late 5% of the tax you owe at that date, as well as the 5% above. 12 months late 5% of the tax unpaid at the date, as well as the two 5% penalties above. Interest penalties if you don t pay your tax on time You will also have to pay interest on anything you owe and haven t paid, including any unpaid penalties, until HMRC receives your payment: From Late payment % Repayment % 29 Sept 2009 3.00 0.50 Example Mr T's tax for the 2012-13 tax year is due on 31 January 2014. HMRC doesn't receive it until 5 Aug 2014. It is over six months late so he will have to pay all of the following: 5 per cent of the tax unpaid at 2 March (30 days after the date the tax was due) 5 per cent of the tax unpaid at 2 August (five months after the first penalty) Interest on all outstanding amounts, including any unpaid penalties
Failing to notify for self assessment HMRC is not always able to identify who needs a tax return so there is a requirement to notify chargeability. The time limit for notifying chargeability is six months from the end of the tax year in which the taxability arises. Notification must be received on or before 5 October. If notification is not made within the six month time limit the taxpayer is liable to a penalty. The maximum penalty if the net amount of the tax due, but unpaid at 31 January following the tax year in which the liability arises. Corporation Tax If your company is liable for Corporation Tax and you don t meet the deadlines specified by HMRC you may face a penalty. Business owners must be mindful that if an error has been made then this should be corrected immediately, as again a penalty may be incurred. You are expected to take reasonable care over you company s tax affairs i.e. ensuring your Company Tax Return is accurate and on time and that you company has sufficient records. Penalties for not keeping these records can amount to 3,000, however this is in extreme cases where no records are kept or have been deliberately destroyed. Penalties for not telling HMRC your company is liable for Corporation Tax If your company has Corporation Tax to pay but does not receive a Notice to deliver a Company Tax Return from HMRC you must tell HMRC it s liable for Corporation Tax. This must be done within 12 months of the end of your Corporation Tax accounting period. If you don t your company maybe charged with a failure to notify penalty. The penalty if based on the amount of tax that s unpaid, the potential lost revenue (PLR). Type of Failure Non-deliberate Deliberate but not Deliberate and Maximum penalty payable 30% of PLR 70% of PLR 100% of PLR
Penalties for not filing your Company Tax Return on time HMRC will send your company (or your accountant) a letter stating that you need to file a CTR. If you (or your accountant) receive this notice and fail to comply then you will receive a penalty (even if you don t owe any Corporation Tax). It is therefore of extreme importance that you provide all the necessary information to your accountant, so they can file the return on time. Penalties for late returns are charged as follows: Length of delay Late More than 3 months late Late for 3 or more consecutive accounting periods Late for 3 or more consecutive accounting periods and file more than 3 months late Penalty Flat-rate 100 penalty. A 100 penalty in addition to the penalty above. Flat-rate penalty increases to 500. A 500 penalty in addition to the flat rate 500 penalty above. If you do not file your Company Tax Return by the later of: 18 months from the end of your Corporation Tax accounting period. Your filing deadline. HMRC may charge additional tax-related penalties which are calculated as follows: Length of delay Return filed between 18-24 months after end of accounting period Return still not filed 24 months after the end of your accounting period Penalty 10% of any unpaid Corporation Tax. A further 10% of any unpaid Corporation Tax, as well as the penalty above. Penalties for inaccurate Company Tax Returns, documents and information The penalties for Corporation Tax errors are a percentage of the extra tax due when HMRC corrects your mistake. The amount of penalty depends on the type of error and when you told HMRC about it. The penalty will be less if you tell HMRC about your error before they find out about it (known as an unprompted disclosure). Type of Error Penalty range for unprompted disclosure Careless 0% - 30% 15% - 30% Deliberate but not 20% - 70% 35% - 70% Penalty range for prompted disclosure Deliberate and 30% - 100% 50% - 100%
Annual Accounts The Companies Act 2006 requires all companies to deliver annual accounts to the Registrar of Companies by the due date. A private company has 9 months from the end of the accounting reference period, a public company has 6 months. However if you change the accounting reference period the filing time may be reduced. The level of the penalty depends on how late the accounts reach Companies House: Length of delay Penalty: Private Company Penalty: Public Company Not more than 1 month 150 750 More than 1 month but not more than 3 months 375 1,500 More than 3 months but not more than 6 months 750 3,000 More than 6 months 1,500 7,500 The penalties double if your accounts are late 2 years in a row. Annual Return penalties Every company must deliver an annual return to Companies House at least once every 12 months. The company s director(s) and the secretary are responsible for ensuring that they deliver the annual return to Companies House within 28 days after the anniversary of incorporation of a company or the anniversary of the made up date of the last annual return. If you do not deliver the company s annual return there are no monetary penalties, however the Registrar might assume the company is no longer carry on business or in operation and take steps to strike it from the register.
VAT You must submit your VAT Return and ensure payment of the VAT due has cleared to HMRC s account by the due date. If you don't, you may have to pay a 'default surcharge', which is a percentage of your unpaid VAT at the due date. If you continue to submit returns or pay late, you will be charged a higher percentage of your unpaid VAT at the due date. If you submit an incorrect VAT Return HMRC may also charge you an inaccuracy penalty. If your turnover is 150,000 or more and HMRC does not receive your VAT Return by the due date or payment of the VAT due has not cleared HMRC s account by the due date your company will be in default. HMRC will send you a Surcharge Liability Notice explaining what will happen if you miss another deadline during the following 12 months, this is called your surcharge period. If you default again during the 12 month surcharge period you may also have to pay a default surcharge on top of your unpaid VAT at the due date. Each additional time you send another late VAT Return or payment your surcharge period will be extended for a further 12 months. Your surcharge percentage will also increase if you pay late. Default First default Second default Third default Fourth default Fifth and subsequent defaults Surcharge to pay (calculated as a percentage of your unpaid VAT at the due date No surcharge. Surcharge Liability Notice issued. 2% (unless it is less than 400, in which case you won t be charged a surcharge at this rate) 5% (unless it is less than 400, in which case you won t be charged a surcharge at this rate) 10% (unless it is less than 30, in which case you will be charged 30) 15% (unless it is less than 30, in which case you will be charged 30) 12 months. Surcharge period If your turnover is less than 150,000 and HMRC does not receive your VAT Return by the due date or payment of the VAT due has not cleared HMRC s account by the due date HMRC will send you a letter offering help and support. If you default again within 12 months HMRC will send you a Surcharge Liability Notice explaining what will happen if you miss another deadline during the following 12 months, this is called your surcharge period. If you default again during the 12 month surcharge period you may also have to pay a default surcharge on top of your unpaid VAT at the due date. Each additional time you send another late VAT Return or payment your surcharge period will be extended for a further 12 months. Your surcharge percentage will also increase if you pay late.
Default Surcharge to pay (calculated as a percentage of your unpaid VAT Surcharge period at the due date First default No surcharge. Help letter issued. None, but if you miss another VAT deadline within 12 months of the issue of a help letter you will formally enter the surcharge system. Second default No surcharge. Surcharge Liability Notice issued. 12 months. Third default Fourth default Fifth default Sixth and subsequent defaults 2% (unless it is less than 400, in which case you won t be charged a surcharge at this rate) 5% (unless it is less than 400, in which case you won t be charged a surcharge at this rate) 10% (unless it is less than 30, in which case you will be charged 30) 15% (unless it is less than 30, in which case you will be charged 30) You will not have to pay a surcharge if you submit: a nil return late. a late return when you are due a VAT repayment. A return late when you have paid your VAT on time, however, HMRC will record this as a default and extend your surcharge period because of the late return, but they won t increase the rate of surcharge. Penalties for inaccurate VAT Returns The penalty for an inaccurate VAT Return depends on why the error was made. The penalty is calculated as a percentage of the tax unpaid, understated, over claimed or under-assessed, as a result of the errors. You will also have to pay the Vat and any interest due in addition to the penalty. Reason for the error Disclosure of the error to HMRC Minimum penalty (as a percentage of the tax) Careless Unprompted 0% 30% Prompted 15% 30% Deliberate Unprompted 20% 70% Deliberate and Prompted 35% 70% Unprompted 30% 100% Prompted 50% 100% Minimum penalty (as a percentage of the tax)
Pay As You Earn (PAYE) Monthly or quarterly PAYE payments Penalties are charged on each PAYE reference number, you will not be charged a penalty if only one PAYE amount is late in a tax year unless than payment is over 6 months late. The amount of penalty will depend on how much is late and how many times your payments are late in a tax year. The first failure to pay on time does not count as a default: Number of defaults in a tax year Penalty percentage Amount to which penalty percentages apply 1-3 1% Total amount that is late in the tax year (ignoring the first late 4-6 2% payment in that tax year) 7-9 3% 10 or more 4% Example ABC Ltd paid 4 payments late in the tax year 2012-13. The first late payment is not counted as a default therefore they have 3 default payments in total, which means that a penalty of 1% is due on the total amount of PAYE paid late (excluding the first payment). Additional penalties for monthly and quarterly payments over 6 months late If you have still not made a monthly or quarterly payment in full, after 6 months you have to pay a penalty of 5%. A further 5 % may be charged if you have not paid after 12 months. These are in addition to the penalties above. End of year adjustments You may be charged a late payment penalty if you pay less than is actually due. To avoid receiving a penalty you must make certain that you pay the right amount on time each month or quarter. Full Payment Submission (FPS) penalties There will be no penalties if in-year FPSs are submitted late.
P11D(b) If you are required to file a form P11D(b) it much reach HMRC by the filing date of 6 July. If HMRC do not receive the return by 19 July, a penalty will be incurred. The same deadline applies regardless of whether you file the form online or send HMRC a paper version. If your P11D(b) remains outstanding for more than 4 months you ll receive a penalty notice shortly after 6 November and again the following March and July, if necessary. The penalty will be calculated at 100 per 50 employees for each month or part month you delay filing your P11D(b). For Class 1A NIC payments penalties are due as follows: 5% if you have not paid the full amount within 30 days of the due date. An additional 5% if you have not paid the full amount within 6 months of the due date. A further 5 % if you have not paid the full amount within 12 months of the year end. PAYE Settlement Agreement (PSA) penalties The deadline to make a PSA payment is the 19 October. For Class 1B NIC payments penalties are due as follows: 5% if you have not paid the full amount within 30 days of the due date. An additional 5% if you have not paid the full amount within 6 months of the due date. A further 5 % if you have not paid the full amount within 12 months of the year end.