Missing a tax deadline may not be the worst offense you can commit, but it can and should be avoided as much as possible. Most people are very intent on keeping on top of their tax returns obligations and avoiding a fine is definitely a part of their tax submission plans. We all know what they say about “the best laid plans”…they can get waylaid when life and busyness gets in the way. The Taxman however will not be put off and the fines that are now in place in the UK for missing the tax return deadline are:
- £100 for missing the deadline date plus 5% of tax due for over 30 days late.
- Daily penalties of £10 per day for up to 90 days late (up to a maximum of £900.
- 5% of tax due or £300 if greater for being six months late.
- 5% of tax due or £300 if greater for over twelve months late.
How late filing can happen
Late filing of tax returns can occur for many reasons. Some people can be anxious about filing their tax return, and such anxiety can result in putting off the submission and the incurring of a fine. For other tax payers, there can be some misconceptions about filing a tax return which may end up in a fine. Two such misconceptions are given below.
Tax return misconceptions
- “I don’t make a profit so I don’t need to submit a tax return”. This misconception lies in the opinion that most people have of the Revenue – they only want to collect taxes! This is in fact just one part of the Revenue’s tax jurisdiction. The request to submit a tax return is one of the ways the tax authorities are informed of the tax payer’s tax position – so if you are in business and have not made a profit, completing your tax return is the way that this is communicated. The non-submission of a tax return is likely to have the tax authorities thinking there are profits to report, and therefore it is wise to put their mind to rest by making the submission.
- I didn’t make any sales, so I don’t have to submit a tax return”. If you are in business and have commenced trading, not making sales, is a disappointment to say the least, but is not a reason not to submit the tax return. Similar to the point above, the Revenue will only know you made no sales within that reporting period if you report it on your tax return. As you would have incurred expenses in support of your intended sales, these expenses need to be reported to give a true picture of your trading position for that period. Additionally, the net loss that is the result for any tax period is available to be set against future profits. Not reporting these losses can mean losing the offset benefit and the possibility of paying higher taxes on future profits.
Tax filing dates in the UK
In the UK we are allowed nine months to make a tax return submission, which by comparison with some other countries is very generous e.g. France which allows non residents up to 19th May to submit a tax return after the end of the calendar year; and in Denmark by 1st May.
A planned submission of your tax return can help you to utilize this generous submission time period by using any part of the submission time line after the end of the tax year that suits you – both for the filing and making the payment. This not only puts you in control – averting the panic of unplanned last minute submission, but can also help with planning the tax payments (if there are any tax liabilities). Completing your tax return early, will inform you of your tax position, and you can use the early preparation to pay off your taxes before the final payment deadline.
Getting help with your business record keeping and tax return obligations is one of my mantras. Help does not have to cost, but it must be sought out to determine usefulness to your particular situation. Talking to others in your business network groups or with your friends and family may provide information about help that is available. HMRC has a free tax submission facility which you can take advantage of. This is particularly useful if your tax return is simple.
If you do have to pay for help, be realistic about the cost of such professional service as it relates to the level of support you require. Like all services, you may not need to have all that is on offer, but only what is necessary to your current status. Make sure you check out the services being offered and make price comparisons if necessary.
Think of the payment to get your tax return done on time as an investment in your peace of mind. With your tax return done you will have time to concentrate on your trade or personal life, keep the Taxman happy and be free of the prospect of getting a late penalty fine!