Over 11.5 million taxpayers were required to file their 2017/8 tax returns by 11:59pm on the 31st January 2019. This year, around 700,000 returns were submitted on deadline day. Whilst over 700,000 people missed the self-assessment tax deadline.
HMRC revealed some of the strangest excuses they received from customers who had missed the date. One customer claimed to be too short to reach the post-box. Another declaring their boiler had broken down leaving them too cold to type.
Whatever the reason for missing the deadline, if you’re a contractor that’s part of the 6.32% of those that failed to get their tax return in at the end of January, you need to know what will happen next and what actions you need to take.
What penalties will I face?
If you haven’t yet submitted your return it’s important to remember that the longer you delay, the more you will have to pay.
An initial fixed penalty of £100 will be charged to anyone who doesn’t get their tax return in by the 31st January. This fee will apply even if there is no tax to pay, and even if the tax due is paid on time.
Following this you will face:
- Additional daily penalties of £10 per day (up to a maximum of £900) after a 3-month period
- A further penalty of 5% of the tax due, or £300, (whichever is the greater sum) after 6 months
- Another 5% or £300 charge after 12 months
If you are faced with a fine, you will receive notice of this in the post by the end of February.
To work out exactly how much you will need to pay in penalties and interest use the Government’s online tool which calculates the precise amount owed.
If you do face fines, it’s important to pay them as soon as you can. Failing to pay the penalties can lead to HMRC carrying out action against you. Including collecting the amount owed through your earnings. Organising debt collections and in some cases, even court action. To avoid further action contact HMRC as soon as possible – you may be able to negotiate more time to pay or put an instalment plan in place.
I’ve missed the deadline – what do I do next?
To keep the penalties you face to a minimum you’ll need to act quickly.
Contractors should make sure the first action they take is to file their self-assessment online, not by post. The postal deadline for returns was the 31st October 2018. Sending off your return by post will mean that you automatically incur the maximum fine of £900.
To complete an online tax return you will need to be registered with the Government Gateway or Gov.uk. If you have filed a return in the past, then you should already be registered. Note that this is different from registering for self-assessment which you will need to have done by 5th October 2018.
If this is your first time filing a return you will need to register for a login at Gov.uk. Do this as soon as possible as it can take up to 10 days to receive the activation code and there’s no way of speeding the process up.
Once you have registered and logged into the portal:
- File a complete online self-assessment tax return for the 2017/18 tax year
- Pay your tax bill: you will need to pay any remaining tax you owe for the tax year 2017/18.
What if I can’t afford to pay the tax bill?
If you can’t afford to pay your tax bill get in touch with HMRC as soon as possible to avoid incurring further late payment penalties.
You will get the opportunity to explain your situation to HMRC who will decide on a plan going forward. This typically involves agreeing to spread the payments of the tax bill over time to make the amount that you owe more manageable.
I have a genuine excuse for missing the deadline – can I appeal the fine?
HMRC have received plenty of weird and wonderful reasons and excuses from customers for why they’ve missed the deadline in the past – with one customer even claiming that their mother-in-law was a witch who had put a curse on them.
But, of course, many people will have a legitimate reason. If this applies to you, get in contact with HMRC as soon as possible to discuss your circumstances.
HMRC assess cases on an individual basis and state that the decision to lift the fee or not depends on the individual’s situation.
HMRC’s guideline for legitimate excuses are:
- An unexpected hospital stay that prevented you from dealing with your taxes in time
- A serious or life-threatening illness
- A close relative dying shortly before the return deadline
- Issues with the HMRC online services
- Issues with computer or software failures just before or whilst you were filing the return
- A fire, flood or theft that prevented the filing of the return
If these apply to you, reach HMRC on their helpline which you will find on 0300 200 3822 to discuss how you will move forward.
Next Steps – get the help of an accountant
Contractors that have missed the self-assessment deadline will now be equipped with all the tools and information they need to resolve the issue as soon as possible.
