Self Assessment Fines and Penalties

Fines and Penalties

If you are one of the people who still haven’t filed their self assessment tax return, or your accountant has filed your paperwork and you haven’t yet paid your tax then you might want to read this.

Registration

If this is your first year completing a self assessment return, it will usually take you 20 working days to register fully with HMRC, so if you haven’t done this already, you are too late.

HMRC recommends that you register for self assessment by October 5th, the main deadline to be aware of is the January 31st deadline, if your paperwork has not been filed or your tax is still owed, you will be fined.

Fines

In 2015, 890,000 people missed the deadline and HMRC launched a consultation on getting rid of the £100 fine for people who were only late by 1-2 days. Currently, you will still receive this fine, unless you have a good reason for it. If you only miss the deadline by less than three months, then you will only pay £100. If you are past those three months, you will be fined a further £10 a day for up to 90 days, to a maximum of £900.

After six months, you can be fined 5% of the outstanding tax on that date or £300 if this is greater. If you still haven’t filed your return after 12 months, you will be fined another 5% of £300, whichever amount is higher. Unless HMRC think that you are deliberately withholding information from them. If this is the case, you will be fined 100% of what they think you owe, with reductions for disclosures, payments and helping.

As you can see, these fines can get pretty expensive so talk to us if you have any questions or need advice.

Late Payment Penalties

The first late payment penalty is 5% of any tax unpaid after 30 days (28th February).

Where a balancing payment or payment on account is still unpaid more than 30 days from the due date for that year’s balancing payment, a late payment penalty automatically arises equal to 5% of the tax unpaid at that date.

There will always be some taxpayers who intend to pay on time but, for some genuine reason, fail to do so. The 30 day period before a late payment penalty arises ensures that these taxpayers do not incur such a penalty.

There may also be some taxpayers who, having calculated their final liability for a tax year, realise that they will have insufficient funds to pay the balance due at the due date. The 30 day period gives these taxpayers time to contact HMRC to arrange a suitable scheme of payment.

The second late payment penalty is 5% of any tax unpaid five months after the penalty date (31st July).

Any tax that remains unpaid after the end of the period of 5 months beginning with the penalty date is again subject to a late payment penalty equal to 5% of the unpaid tax.

The third late payment penalty is 5% of any tax unpaid 11 months after the penalty date (31st January following year).

Any tax that remains unpaid after the end of the period of 11 months beginning with the penalty date is again subject to a late payment penalty equal to 5% of the unpaid tax.

Taxpayers Affected By Flooding

If your reasons for not paying are perfectly understandable, such as; a bereavement or illness, you may get a reprieve. HMRC have also stated that they will make a special provision for those who have been affected by the floods.

As a taxpayer if you have been affected by the floods, you could be offered instalment arrangements to pay taxes and HMRC will suspend debt collection and cancel penalties if you cannot pay as a result of the floods.

Taxpayers who need help paying their bill can use a special flooding helpline, 0800 904 7900, to discuss their options, including paying in instalments.

How To Pay Your Self Assessment Tax Bill – via HM Revenue & Customs www.gov.uk

The time you need to allow depends on how you pay. For all payments use your 10-digit Unique Taxpayer Reference (UTR) followed by the letter ‘K’ as your payment reference. You’ll find it either in your HMRC online account or on your paying-in slip, if you get paper statements. Your payment may be delayed if you use the wrong reference number.

Same Or Next Day Payments

Online or Telephone Banking (Faster Payments)

CHAPS

You can make a transfer from your bank account by Faster Payments, CHAPS or BACS. Your bill will tell you which account to pay it to. If you don’t have a bill, or you’re not sure, use HMRC Cumbernauld.

Bank Account Details:

HMRC Cumbernauld

Sort Code: 08 32 10

Account No.: 12001039

HMRC Shipley

Sort Code: 08 32 10

Account No.: 12001020

If you pay by debit or credit card online you will receive a 1.5% fee for using a credit card which is not refundable.

HMRC will accept your payment on the date you make it, not the date it reaches their account – including on bank holidays

Post Office and Bank or Building Society.

You need a paying-in slip from HMRC to pay at a bank, building society or Post Office.

Three Working Days

BACS

Direct Debit (if you’ve set one up with HMRC before)

Cheque (through the post)

You can send a cheque by post to HM Revenue and Customs (HMRC).

HMRC

Direct

BX5 5BD

You don’t need to include a street name, city name or PO box with this address.

If you have a reply envelope showing a different address (HMRC, Bradford BD98 1YY), you can still use the envelope to post your cheque.

Allow 3 working days for your payment to reach HMRC.

What to include:

Make your cheque payable to ‘HM Revenue and Customs only’ followed by your Unique Taxpayer Reference (UTR) number. You’ll find this on your paying-in slip. Include the paying-in slip HMRC sent you (if you still get paper statements). Don’t fold the paying-in slip or cheque or fasten them together.

If you don’t have a paying-in slip you can print a slip to use to pay by post. You can’t use this at a bank or Post Office.

Five Working Days

Direct Debit (if you haven’t set one up with HMRC before)

If the deadline falls on a weekend or bank holiday, make sure your payment reaches HMRC on the last working day before (unless you’re paying by Faster Payments or by debit or credit card). Set up a Direct Debit through your HM Revenue and Customs (HMRC) online account to make single payments for 31 January. Set up another debit before 31 July if you need to make a payment on account. You’ll need to set up single payments each time you want to pay by Direct Debit.

Bank or Building Society

You can only pay at your branch by cash or cheque if you both:

a) Still get paper statements from HM Revenue and Customs (HMRC)

b) Have the paying-in slip HMRC sent you

Make your cheque payable to ‘HM Revenue and Customs only followed by your reference number – this is your Unique Taxpayer Reference (UTR) followed by the letter ‘K’. You’ll find it on your paying-in slip. HMRC will accept your payment on the date you make it, and not the date it reaches their account (as long as you pay from Monday to Friday).

If you don’t have a paying-in slip you’ll need to pay by another method instead, eg, debit or credit card online, online or telephone banking, Direct Debit

Budget Payment Plan

You can set up a ‘budget payment plan’ to make regular payments in advance.

The payment plan lets you:
You can set up your plan using your HM Revenue and Customs (HMRC) online account. Go to the Direct Debit section and choose the budget payment option when filling in the Direct Debit form.

  • Decide how much to pay each week or month
  • Stop paying for up to 6 months

You must be up to date with your previous Self Assessment payments to use this option. If the total you’ve paid during the year doesn’t cover your bill in full, you’ll have to pay the difference by the payment deadlines.

Has Your Payment Been Received?

View your HM Revenue and Customs online account to check if your payment has been received – it should show as paid between 3 to 6 working days later.

If you are paying by post, include a letter with your payment and ask for a receipt from HMRC.
Get help doing your self assessment tax return from professionals who can guide and offer advice through the whole process. Contact K .A.Farr & Co Chartered Accountants in Southport, our team will complete and file your returns for you or your business. Don’t wait any longer, if you are late you will be incurring penalties and/or interest charges.