Late Tax Filing and Payment: Consequences and Solutions
Late tax filing and payment can lead to significant penalties and interest charges. This article delves into the repercussions of failing to file or pay taxes on time and offers guidance on navigating this situation.
Consequences of Late Tax Filing:
When you miss the deadline for filing your tax return, typically by January 31st following the tax year’s end, you face an automatic non-refundable penalty of £100. It’s essential to note that this penalty won’t be waived for reasons like ignorance or negligence. However, reasonable excuses may grant you an exemption.
If your tax return remains overdue for more than three months, you’ll incur an additional penalty of £10 per day, up to a maximum of 90 days. It’s worth mentioning that daily penalties do not apply to Capital Gains Tax (CGT) returns.
The tax authority adds an additional penalty of £300 or 5% of the tax liability (whichever is higher) for returns filed more than six months late. If your return is filed over twelve months after the deadline, the tax authority will impose another £300 penalty or 5% of the liability, in addition to the previous 31st July penalty.
Late Payment Consequences:
Interest accumulates on late tax payments, and additional surcharges apply to unpaid liabilities. A 5% surcharge is imposed if you don’t pay the tax liability for the previous year within 30 days after January 31st. Another 5% surcharge is applied if you fail to pay the tax by the 31st of July. If the tax is still outstanding by the following January 31st, a third 5% surcharge is added.
What to Do If You Cannot Pay:
If you find yourself unable to pay your taxes on time, taking prompt action is crucial. Contact HMRC to discuss your situation and explore the possibility of arranging a payment plan. You can get in touch with the Business Payment Support Service Helpline at 0300 200 3835 for assistance in identifying a suitable solution.
In summary, late tax filing and payment can result in hefty penalties and interest charges. It’s imperative to file your tax return by the deadline and pay your taxes promptly to avoid these consequences. If you encounter difficulties in paying, reaching out to HMRC for assistance and setting up a payment plan can help you manage your tax obligations effectively.
