Daily penalties for late 2018/19 tax returns
From 1 May 2020, HMRC will start to charge you daily penalties of £10 if you have not yet submitted your 2018/19 Self Assessment tax return (assuming the return was not issued late). Unless HMRC agree to cancel the need for a tax return, you should send it in as soon as possible – online, rather than on paper.
If you did not file your 2018/19 tax return (assuming it was not issued late), by the 31 January 2020 deadline for online returns, HMRC will already have charged you a penalty of £100.
If you need to report self-employment income on that return and did not submit it by 23 April 2020, you will also unfortunately not be eligible for the coronavirus (Covid-19) Self-employment Income Support Scheme.
What changes from 1 May 2020?
If a Self Assessment tax return is more than three months late, HMRC start to charge a £10 penalty for each day that the return remains outstanding. For 2018/19 tax returns, normally due (if submitted online) by 31 January 2020, this means that the daily penalties start to be charged from 1 May 2020.
The £10 daily penalties continue to be chargeable for up to 90 days unless you submit your return within that time. As soon as HMRC have received the return, the daily penalties stop building up, but any that have been incurred up to the date of submission will still be chargeable unless you can successfully appeal against them (see below).
Note also that these daily penalties take no account of the amount of tax you owe – even if you owe nothing or are owed tax back.
What should I do?
If you think HMRC should not have asked you to fill in a 2018/19 tax return, they might agree to cancel it. You should contact them as soon as possible, as explained in our guidance. If they agree to withdraw the return, you will no longer need to submit it and any penalties for missing the filing deadline will be cancelled. Such an application should be made within two years of the end of the tax year to which the return relates.
Otherwise, you should submit your outstanding 2018/19 tax return as soon as possible.
You should submit an online return. This is because paper returns for 2018/19 were due to be submitted by 31 October 2019, so daily penalties for a paper return submitted after 31 January 2020 would already have been building up, with the maximum of £900 being charged if you submit a paper return now.
What if I am having trouble gathering together the information I need?
Sometimes, it might be difficult to get together the information you need for a tax return. Particularly at the present time, it might be, for example, that due to the coronavirus lockdown measures you are unable to access information from other people or places.
In this situation, you can consider sending HMRC a provisional return – that is, one with estimated figures on it – and then provide them with the actual figures as soon as you can.
If you do this, make sure you tell HMRC in full in the additional information box of the return what figures are estimated and/or which boxes have been provisionally completed. You can also tell them why you cannot provide accurate figures at this time and when you will be able to provide them.
Including full information on the tax return about any such provisional entries will help you to show you have taken reasonable care in the event that HMRC try to charge you a penalty for an inaccurate return.
Can I appeal against late tax return penalties?
As above, if you think you should not have been in Self Assessment for 2018/19, before you fill in a return, try asking HMRC to withdraw the notice to file a tax return. If HMRC agree to this, any penalties will be cancelled with the return.
In other cases, late filing penalties can be appealed if there is a reasonable excuse for filing late such as prolonged ill-heath, bereavement or family breakdown. HMRC can also agree to reduce penalties (giving you a ‘special reduction’) if special circumstances apply.
While the 31 January 2020 deadline for 2018/19 returns had already passed by the time the latest restrictions on people’s activities were put in place to prevent the spread of the coronavirus, it might be that for continued late filing of returns HMRC will be sympathetic in applying daily penalties, given that HMRC have the discretion not to charge them.
Where can I find out more?
We provide more information on tax penalties in our main guidance, together with further information on appeals.
If you need help completing a tax return, our Getting Help page gives information on how to contact a paid professional tax adviser and, if you are on a low income, how you can contact the tax charities, TaxAid and Tax Help for Older People.