If you miss the deadline for filing your self-assessment tax return (28 February for online filing) you will be charged a £100 penalty.
If the return is filed more than three months late, an additional £10 per day is charged, and after six months another penalty is imposed as the higher of £300 or 5% of the tax due. The flat-rate penalties will stand even if the tax return shows no tax.
Your company’s Corporation Tax return is due a year after the end of the accounting period. The penalty for being even one day late is £100 and another £100 is imposed after three months, then 10% of the tax due if the return is six months late. If you make a habit of submitting late company returns, the fixed penalties rise to £500 each time.
If you have a ‘reasonable excuse’ HMRC may agree to cancel the penalty. Where the coronavirus pandemic affected your ability to file tax returns on time, HMRC will accept this as a reasonable excuse.
Where you will need more time to submit your company’s tax return ask HMRC for an informal extension in advance of the deadline. We can help you with this.
Paying tax late will also attract interest and sometimes a penalty. VAT paid late can trigger a penalty of up to 15% of the delayed payment, even where the delay is only one day.
The government permitted individuals and businesses to defer some of the income tax and VAT due in 2020 until 2021. Where you will have difficulty in paying tax debts falling due in 2021, you should ask HMRC to set up a payment plan to spread the debt over up to 12 months. Do this as soon as possible.