Warning issued around worsening penalties for tax return filing failures

Taxpayers who fail to file their tax returns by the end of the month will be subject to a fixed penalty, and it could worsen depending on how long people wait to file and pay what they owe, leading accounting and tax advisory firm Blick Rothenberg has said.

Firm partner Nimesh Shah said: “Some 5.4 million people still have to file their tax returns according to latest figures from HM Revenue & Customs (‘HMRC’), and as around 11 million individuals need to file a 2018/19 tax return it means that almost half of the population have yet to do so.

“The problem is that fines and penalties can quickly add up. If you don’t file your tax return by 31 January 2020, HMRC will issue an automatic fixed penalty of £100. If the tax return is three months late, HMRC will start charging daily penalties of £10 per day and these run for a period of up to 90 days, so up to £900 in total.

“After six months, HMRC will charge a penalty of 5% of the person’s tax or £300 – whichever is higher. Therefore, within six months, someone could be facing total penalties of at least £1,300. The penalties start to become even more serious if the tax return is more than 12 months late and can be as much as 200% of the tax.”

Shah warned that HMRC will charge these penalties even if the person doesn’t actually have any tax to pay so it is “imperative that people get their tax affairs up to date and make the returns in a timely fashion”.

“You also need to pay any tax you owe for 2018/19 by 31 January 2020, together with the 1st payment on account for the 2019/20 tax year, if this is relevant for you,” he stated.

“If a person doesn’t pay their tax on time, HMRC will charge daily interest at 3.25%. Furthermore, if you don’t pay the tax by 1 March, HMRC will charge a penalty of 5% of the tax and further 5% penalties are levied if the tax is unpaid at six months and 12 months.”

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