What to do if you miss the tax return deadline

Cut-off date of 31 January draws near, but you can reduce the impact of not filing on time.

There are just 10 days to go until the self-assessment tax return deadline.

But with the pandemic weighing on people’s minds, and their income, what happens if you fail to file before 31 January?

Taxpayers who are self-employed or who earn untaxed income, such as through savings and investments outside an ISA or their annual allowances, must compete a self-assessment tax return and pay anything due by the end of January.

This covers anything earned from the previous tax year, so in this case running from 6 April 2019 to 5 April 2020.

Penalties

There is an initial penalty of £100 from HM Revenue & Customs (HMRC) if you file late.

The taxman will then charge you £10 per day for a maximum of 90 days if your return is three months or more late.

If you are six months late, HMRC can charge the higher of £300 or 5% of the tax due, plus a further £300 or 5% if the form is still not returned after 12 months.

Appealing charges

Taxpayers can appeal against penalties charged and have the opportunity to argue the case in front of a tax tribunal.

You will usually be given 30 days to appeal a decision but HMRC are giving an extra three months to appeal any decision dated February 2020 or later if the delay is because of coronavirus.

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Michael Wallace, legal advisor at DAS Law, says there may be legitimate reasons for filing late.

He highlights HMRC guidance which says that a reasonable excuse for missing the deadline is “…normally something unexpected or outside your control that stopped you meeting a tax obligation”.

Wallace says examples include the recent death of a partner, an unexpected stay in hospital, computer failures, service issues with the tax authority’s online services, a fire that prevented the completion of a tax return, or postal delays.

He adds: “HMRC will consider coronavirus as a reasonable excuse for missing some tax obligations, such as payments or filing dates, but it will be up to you to show how coronavirus has affected you in the appeal.

“There is still an expectation for you to make the return or the payment as soon as possible.”

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Wallace warns that HMRC will not accept excuses such as if you relied on someone else to send your return or did not understand the online tax filing system.

He adds: “HMRC will amend or cancel a penalty for late filing in cases where the taxpayer can show that there was a reasonable excuse for failing to file on time. 

“However, that excuse needs to have prevented the taxpayer from filing a return over the wholeperiod – in other words, it must have applied continuously.

“For example, your case will be considerably weakened if you have actually worked and received taxable income during the period of the delay. HMRC might well argue that, if you were well enough to work, you were well enough to complete your tax return.”

Deadline extended?

There have been reports that the self-assessment tax return deadline has been extended.

But Fiona Fernie, a tax dispute resolution partner at advisory firm Blick Rothenberg, warns this is not the case across the board.

She adds: “Those who need to make a return should do so and pay what is owed if they can. 

“HMRC should be sympathetic but not if they feel that people are using the pandemic as an excuse.”