QUESTION: What are the consequences if I am unable to file my personal tax return for the year to April 5 last year and I cannot pay the owed tax amount by the January 31 deadline?
ANSWER: Missing the UK tax filing deadline can cause a few problems. First off, there are penalties you might face for filing late. These penalties can get bigger the longer you wait to file. If you’re up to three months late, there’s usually a fine of £100. But if it goes beyond that, the penalty grows.
On top of that, if you owe any tax and miss the deadline, HMRC will add interest to the amount you owe. This interest keeps growing from the date the tax was due until you’ve paid it all off. HMRC have been steadily increasing the interest rate it charges on unpaid income tax, national insurance, capital gains tax, stamp duty, corporation tax and inheritance tax to 7.75%. This rate is a 15-year high and it has almost trebled in two years.
Not getting your tax return in on time might also affect any benefits or allowances you get that depend on your tax return information. Things like tax credits or certain reliefs might be impacted.
In serious cases where someone repeatedly doesn’t file their taxes, HMRC might take legal action. This could mean more fines or other legal trouble.
- How tax and pension planning can encourage retired workers back to workOpens in new window
- 60-day capital gains tax reporting for residential property disposalsOpens in new window
- Limited company v sole trader - what's the difference?Opens in new window
- Transfer of shares to my childrenOpens in new window
So, the best thing to do if you’ve missed the deadline is to complete and file your tax return as soon as you can. Even though you’ve missed the deadline, getting it sorted quickly can help reduce some of the penalties. If there’s a really good reason why you missed the deadline—like a serious illness or something like that—letting HMRC know might help reduce the penalties too.
It’s important to know that these consequences can change depending on your situation. It’s always a good idea to talk to a tax expert or get in touch with HMRC directly if you’ve missed the deadline. They can give you guidance that’s specific to your case and help you figure out what to do next.
My advice to you and others who may be struggling to pay their tax bill on time and in full is to communicate with HMRC and look to set up a Time to Pay payment plan to pay it in instalments, and this can help mitigate your exposure to penalty charges. Early contact with HMRC is advisable to prevent enforcement action being taken against you. It should be borne in mind that a Time to Pay arrangement will not avoid interest being charged on the outstanding taxes.
If you would like to find out more about options available to you, please feel free to contact me at the email address below.
:: Malachy McLernon (m.mclernon@fpmaab.com) is partner at FPM Accountants Ltd(www.fpmaab.com). The advice in this column is specific to the facts surrounding the question posed. Neither the Irish News nor the contributors accept any liability for any direct or indirect loss arising from any reliance placed on replies
