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What happens if you forgot to make your Tax Return?


Last year 11.5 million UK residents were due to submit an online tax return by the 31st of January 2018.  Of this, over 10.5 million were received on time (93.56%), but almost 750,000 were still outstanding by the 1st February 2018.

Although the figures have not been released for this year, there will be many who should have made a submission, who will have missed the 31st January 2019 deadline.

If this applies to you, you should read on, as both failing to make a return or being late in paying back tax, which you have been found due to pay, can have serious consequences for you.

What happens next?

First, if you have been late in making your return, you do want to make it as soon as you can, to minimise any future penalties that you will face.

So, if you have not already registered to make an online tax return you should do so as quickly as you can with HMRC. This involves being sent an activation code by post and that can take up to seven days.

Once you are registered to make your online application, even if you don’t have all the correct figures yet, you can still include estimated figures and file the return, stating that it contains provisional figures. This may help you avoid penalties.

You can then confirm the figures ones once you have them.

However, if you are using estimated figures, you should ensure they are as accurate as possible to avoid being penalised for making an inaccurate return.

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Late submission penalties

If you, however, do submit a late return or fail to make a return, you will normally face penalties. The first penalty is £100 for being late; even if it later transpires you don’t owe any tax.  After three months, if you have still failed to submit your return, a daily £10 charge is then applied. This can continue for 90 days meaning up to £900 could be applied.

After that, at 6 months, a further penalty of £300 can be applied or 5% of the tax that is due, whatever is highest. This can happen again at 12 months.

Late payment Interest

Where you have been late in making a payment of any tax that is due, HMRC can charge you late payment interest at 3.25% and then also apply a late payment penalty of 5% after 30 days, followed by another 5% after 6 months and 12 months.

Reasonable Excuse Defences

Where you have been late in making a return, it may be that you can make a “reasonable excuse” defence. This may prevent you from having a penalty applied or allow a penalty that has been applied to be removed.

To make a “reasonable excuse” defence, you need to complete a form (see here) and return it to your local HMRC office (the address will be on any self-assessment letters or notices you receive).

The types of excuse that HMRC may accept are:

  • A failure in their computer system;
  • If your computer breaks down whilst you are submitting your return;
  • Any serious mental or physical illness that means you were incapable of making the return, although you will probably have to provide evidence of this;
  • If you registered with the HMRC but did not receive your activation code in time.

Each application is considered on a case by case basis by HMRC.

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Time to pay payment plans

Where you are not able to pay your tax on time you may be able to apply to HMRC to set up a repayment plan. You can do this by going online and making the application online (see here).

You will be able to enter into a repayment plan with HMRC for an unpaid tax bill providing:

  • The amount you owe is £10,000 or less;
  • You have no other tax debts owed; and
  • You don’t already have any HMRC repayment plans set up.

If you do enter a repayment plan with HMRC and do not maintain the payments, HMRC will revoke the plan and remove your right to make payments by instalments, instead demanding the full amount be paid at once.

How can you pay your tax bill?

HMRC will allow you to pay your tax bill by making electronic payments from your bank account or using a debit card. However, since the 13th January 2018, they no longer accept payments using personal credit cards.

Getting Debt Help

If you have missed the deadline for making your 2018/19 self-assessment tax return, or have now made it, but are struggling to pay your self-assessment bill, you should seek advice, as there may be other debt remedies available to you.

This could include applying for an Individual Voluntary Arrangement in England, Wales or Northern Ireland or a Debt Payment Programme or a Protected Trust Deed in Scotland.

To speak with a Creditfix Adviser, for free, confidential advice, call 0808 2234 102.


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