HM Insights

What happens if my tax return is submitted late?

As we approach the 31 January deadline for submitting annual tax returns (for the 2019/20 tax year, for electronic submissions only) some of us might be struggling more than ever to stick to the deadline, particularly in light of the ongoing lockdown restrictions.

Normally if tax returns are submitted late, late filing penalties are applied (even if there is no tax payable) and are only cancelled if the customer has a "reasonable excuse" for filing late. However the list of "reasonable excuses" is short, and includes situations such as a life threatening illness and documents being lost through theft, fire or flood. The late filing penalties start at £100 if the submission is as little as one day late and quickly rack up as the delay goes on.

In addition, if tax is due and is paid late (again after 31 January, if the tax return is being submitted electronically) then penalties will also be incurred. Interest will also automatically apply in addition to these penalties. Unlike the late filing penalty, there is no "reasonable excuse" defence available if tax is paid late.

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Impact of the pandemic

However we are not living in "normal times" and, as a result, HMRC have just announced that it will waive fines for tax returns that miss the 31 January deadline this year – as long as these are filed online by 28 February. HMRC say that whilst they are still encouraging everyone to submit their returns by the usual deadline where possible, they recognise that this might prove difficult this year:

"We recognise the immense pressure that many people are facing in these unprecedented times and it has become increasingly clear that some people will not be able to file their return by 31 January." HMRC chief executive, Jim Harra.

HMRC's chief executive also acknowledged that HMRC could "reasonably assume most of these people will have a valid reason for filing late, caused by the pandemic".

However, taxpayers must still pay their tax bills by the 31 January deadline, with interest being charged as usual from 1 February on any outstanding sums. Taxpayers who are struggling to do so can apply to spread liabilities of up to £30,000 over a period of up to 12 months though – but must first file their return. Anyone with higher liabilities or who needs longer than a year to pay is being advised to call HMRC to discuss this directly.

Those who opt to submit a paper tax return were required to follow the usual deadline of 31 October 2020 for their 2019/20 submission.

Although this change in normal practice will be welcome news for many, it is still advisable that tax returns are submitted as soon as possible and in any event prior to the deadline as set wherever possible.

Get in touch - we're here to help

Harper Macleod's specialist tax team can advise on all matters relative to personal tax and the taxation aspects of trusts and estates. Should you have any queries relative to your own filing and/or tax paying obligations, then please do not hesitate to get in touch.

Glasgow: 0141 227 9659                           Inverness & Highlands: 01463 795 035

Edinburgh: 0131 247 2512                          Shetland01595 695 583

Elgin: 01343 542623

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