If you missed the HMRC self-assessment deadline on 31 January will fine you £100 and more if you continue to delay. It will cancel the penalty if you have a reasonable excuse but if you don’t have one is there another way to dodge a fine?
It’s a common misunderstanding that if you owe tax you’re required to submit a tax return. The correct position is that you only need to file a self-assessment return if you’re asked to do so by HMRC. It does this by issuing a “notice to file”.
However, to prevent you and any individual dodging tax simply by not declaring income, you’re required to notify HMRC within a time limit if you believe you owe tax but haven’t received a notice to file, it’s then up to HMRC to issue one. If it doesn’t do so you won’t be penalised for not submitting a tax return, as you will have missed the HMRC self-assessment deadline.
Once issued, there is no appeal procedure against a notice to file even if you have no income, gains or other tax liability to declare.
If you receive a notice to file but don’t submit a return within the time limit, you will have missed the HMRC self-assessment deadline and the initial penalty is £100. However, even if you don’t owe any tax this can rise to £1600.
You can appeal against a penalty but HMRC will only cancel it if you have a reasonable excuse such as you or a close member of your family being seriously ill and this was a significant factor in why you missed the HMRC self-assessment deadline.
HMRC has the power to withdraw a notice to file. If it does so any penalties for late filing will be withdrawn. This option is only open to HMRC if you haven’t yet submitted the tax return in question and is entirely at HMRC’s discretion.
HMRC will usually agree to withdraw a notice to file a tax return if for a year you don’t meet its criteria for being within self-assessment. This can apply in far broader circumstances than you might think.
For example, you can be a director, have an annual income of up to £100,000 including savings and investment income of up to £10,000, and be entitled to claim expenses linked to your job of up to £2500.
There are, as you would expect, circumstances in which HMRC insists on self-assessment. For example, if you have income from self-employment or you or your partner receive child benefit and one of you has an annual income exceeding £50,000.
If you’ve missed the HMRC self-assessment deadline for submitting one or more tax returns, still haven’t sent time to HMRC and don’t meet the conditions for being in self-assessment, then don’t submit the form. Instead, write to HMRC and ask it to withdraw the notice to file.
Have you missed the HMRC self-assessment deadline? Do you need help getting your affairs in order? Give us a call today, and we can advise you on the best steps to take.