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Late tax return fines to rise sharply


People who submit their tax return after the 31 January deadline will face significantly higher penalties, HMRC has announced.


Previously, returns filed after the deadline would attract a £100 fine. However under the new framework, which first applies to 2010/11 tax returns, taxpayers who file their returns late will be charged £100 on day one and further daily penalties of £10 after three months.


It means that a tax return filed six months late could attract a penalty of at least £1,300.


According to HMRC, the old £100 penalty failed to act as a deterrent. It hopes the new harsher penalty system will therefore encourage people to ‘submit returns as soon as possible’.


‘HMRC spends a lot of time pursuing late returns and getting involved in unnecessary appeals work. We want to focus our resources on more productive work such as catching criminals and collecting tax,’ said a HMRC spokesperson.


The new penalties for filing tax returns late are as follows:


·         Day one – Individuals will be charged an initial penalty of £100, even if they have no tax to pay or have already paid all the tax owed

·         Over three months late – Individuals will be charged an automatic daily penalty of £10 per day, up to a maximum of £900

·         Over six months late – Individuals will be charged further penalties, which are the greater of 5% of tax due or £300

·         Over 12 months late – Individuals will be charged yet more penalties, which are the greatest of 5% of tax due or £300. In serious cases people face a higher penalty of up to 100% of the tax due.


The deadline for submitting paper tax returns is 31 October, while those filing online have until 31 January.


Meanwhile, the penalties for paying income tax late are also being changed. An initial penalty of 5% of the unpaid tax will be charged after 30 days, with further penalties levied at six months and a year if it remains unpaid.