What to do if you haven’t filed your tax return yet

by Robert Powell on 08 February 2012  |  11 comments
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The deadline for filing self-assessment tax returns has passed, yet a million taxpayers are runninf late. And they are in for a nasty shock.

Harry Redknapp isn’t the only person in the UK who has been worrying about tax over the past week, with the deadline for self-assessment tax returns ending last Thursday.

Fortunately for Redknapp, a jury found him not-guilty on four charges of tax evasion. But if you’re still putting off getting your tax affairs in shape and filing your return, you might not be so lucky.

Penalties

HM Revenues & Customs (HMRC) was originally set to slap fines on anyone who filed after midnight on January 31. However owing to a strike by HMRC staff, it said no-one who submitted before Thursday 2 February would receive a penalty. But even this extended date is now long gone.

And according to the taxman, more than a million taxpayers - almost one in ten of those who do their own tax returns - missed the deadline.

HMRC is enforcing an initial penalty of £100 on the first late day. So if you’re reading this and haven’t submitted a required return, it’s probably safe to say you already have this £100 black mark on your file. This fine even applies if you don't actually have any additional tax to pay.

From here, if the return is more than three months late you’ll receive a £10 daily charge for up to 90 days – that’s £900 maximum. If you are six months late an additional £300 will be added or 5% of your tax liability; whichever is higher. For non-submitters who reach January 2013, another £300 or 5% will be slapped on.

This gives a total potential penalty of £1,600 – even for those who have no tax to pay but still submit late. Needless to say, if your tax return is still sitting on your to-do pile, get it done now! But what if you haven’t?

Excuses

HMRC is taking a tough approach to this year’s tax-return process. So if you have not yet filed but need to and have no credible excuse, you’ll really just have to cough up.

But what counts as a credible – or to use HMRC’s language, reasonable – excuse in the eyes of the powers-that-be?

Well, it’s all common sense really. The base definition is loosely: something that is unusual and out of your control. This doesn’t include forgetting about the deadline, finding the online system too complicated, being let down by an accountant or not registering at HMRC online by the filing deadline. Try any of these excuses and you’ll get short shrift from the taxman. We can only assume that the old classics: ‘my dog ate it’ or ‘I was abducted by aliens’ will also hold little water.

HMRC says examples of reasonable excuses include failures in its own computer system, personal computer malfunctions, a serious illness or the failure to receive an activation code in time. However, they must be backed up with sufficient evidence and it must be clear that you have tried to the best of your abilities to submit the return.

So if the website crashes, take a screenshot or photograph of the error message. Contemporaneous evidence may also be required - doctors notes for illnesses and technician reports for hardware computer failures, for example.

However, HMRC did emphasise that it has no exhaustive list of reasonable excuses. So it’s safe to assume that each case will be examined on an individual basis.

Your experiences

Have you filed your return yet? Are the penalties too harsh?

Let us know about it using the comment box below.

More: How to get your online self-assessment tax return right | Why mortgage lenders can see your tax return