What to do if you missed the tax deadline

Every year, over 10 million people in the UK are legally required to complete and submit a self-assessment tax return. However, there never fails to be a substantial group of people who miss the annual tax return deadline, either due to legitimate reasons, ignorance, or simply leaving it too late. The total figure of late tax returns varies from year to year, and HMRC issue both encouragement and warnings to alleviate the number of late filings, but the numbers can range on average from 500,000 to 1.5 million. Don’t panic if you’ve found yourself to be a part of this group but continue to read this guide which will explain what you need to do if you’ve missed the tax deadline. 

When is the self-assessment tax deadline?

To report any untaxed income and earnings, you must complete your personal tax return and pay any tax due by the 31^st January deadline each year. The period of income and earnings you need to report on is the previous tax year which starts every 6^th April until 5^th April. For example, this means that the tax return deadline that was due 31^st January 2023 will be for the period covering 6^th April 2021 until 5^th April 2022.

What happens if you miss the self-assessment tax return deadline?

If you miss the tax return deadline, you’ll receive an automatic penalty come 1^st February. You will receive a letter from HMRC which is a notice of penalty assessment. Not only that but any late payment of tax due will incur interest each day it is not paid for. Depending on how long you leave it to submit your personal tax return, penalties and interest will increase over time and can lead to a hefty bill. Failing to complete and pay for your taxes is a criminal offence and can lead to prosecution although this is rare. HMRC are much more likely to want to reach an agreement with you to recover the tax owed. They do have the legal power to take your possessions to sell at auction in order to recover the tax due which is called distraint.

How much are the penalties when you miss the tax deadline?

There are two types of penalties you may receive when you miss the self-assessment tax deadline. The first penalty is for failure to submit your tax return on time, whereas the second penalty is for failure to pay any tax due on time. This means that you can receive a penalty for failing to submit your tax return by the deadline even if you have no tax to pay. Similarly, it does also mean that you have the opportunity to pay any tax liability without submitting your tax return to avoid receiving both penalties. Both types of penalties however will increase over time and so it is always best to complete and submit your personal tax return as soon as possible, regardless of whether you have missed the tax deadline.

When you fail to file your tax return by the deadline:

• You receive an automatic £100 fine from 1^st February
• You will be charged an additional £10 penalty for each day you are late filing up to 90 days
• Once you are over 6 months late, you will face an additional penalty of £300 or 5% of the tax owed, whichever is greater
• If you fail to submit your tax return after 12 months of missing the tax deadline, you will receive a further £300 penalty or 5% of the tax due, whichever is greater

When you fail to pay your tax liability by the deadline:

• You will pay a penalty of 5% of the tax owed once you have missed the deadline by 30 days
• You will pay a further penalty of 5% of the tax owed once you have missed the deadline by 6 months
• You will pay a final additional penalty of 5% of the tax owed once you have missed the deadline by 12 months

In addition to the late payment penalties, you will be charged interest on top of the tax due. The rate of interest HMRC can charge is fixed by legislation and directly linked to the Bank of England base rate. HMRC are entitled to charge the base rate plus a further 2.5% as interest on outstanding tax payments.

Are there any reasonable excuses that HMRC will accept for missing the tax deadline?

Where you have taken reasonable care to submit your tax return on time, but had extenuating circumstances that resulted in you missing the tax deadline, HMRC may accept reasonable excuses including:

• A partner or close relative died shortly before the deadline
• You had an unexpected stay in hospital that prevented you from filing and paying for your taxes
• You were suffering from a life threatening illness or were unable to prevent delays due to a disability or mental illness
• There were service issues with HMRC’s online services
• A fire, flood, or theft prevented you from completing your tax return

You will need to appeal any penalty you receive for missing the tax deadline and provide your reasonable excuse. If you are appealing a penalty due to late payment of tax, HMRC will only consider your appeal once you have submitted your tax return, so it’s important to do so as soon as possible. If you would like to appeal a penalty for failing to file a tax return on time on grounds that you believe you are not required to do so, you will need to contact HMRC directly. You can do this online with a government gateway ID or you can contact them. If they agree that there was no need for you to complete a tax return they will revoke your penalty.

Can you still submit a tax return after the deadline?

Yes, you can still submit your tax return after the tax deadline if you were meant to do so. In fact, it is important that you do this as soon as possible to prevent penalties and interest from racking up. Do not panic if you have missed the deadline, as it may mean you feel pressured to rush to complete your tax return which could lead to mistakes and result in further penalties. Instead, you may want to seek expert assistance from chartered accountants who will be able to complete your tax return for you as quickly and accurately as possible.

What to do if you cannot afford to pay your tax return

If you have missed the tax deadline due to being unable to pay your tax in full, then it is still important that you file your tax return as soon as possible. This again will prevent penalties from increasing. If you have filed your tax return on time, but did not pay in time due to being unable to pay in full, then the best solution is to set up a Time To Pay agreement which is a payment plan. The payment plans are completely flexible and negotiated directly with HMRC. You may be able to set up your own payment plan so long as you have submitted your latest tax return, owe less than £30,000, are within 60 days of the payment deadline and intend on being able to pay off your debt over the next 12 months or less.

How to avoid missing the tax deadline

A very important step to avoid missing the tax deadline is to be sure you are registered for self-assessment tax returns well before the deadline if you know you are required to complete a tax return. This often catches people out who need to complete one for the first time. By registering for self-assessment, you will receive a Unique Taxpayer Reference (UTR) but this is sent by post and can take 10 working days (more if you are abroad). You will need your UTR to file your tax return, so if you have left it to the day before the tax deadline to register, you will miss the tax deadline. Make sure you factor in enough time if you are filing your tax return for the first time.

The second way you can avoid missing the tax deadline is to aim to complete your tax return as soon as possible. You can file your tax return as early in the tax year as 6^th April, even though the deadline is 31^st January. Did you know there are even benefits to filing your tax return early?

Finally, if you are worried about being able to pay your tax by the tax deadline, then there are different ways you can spread out the cost of your tax bill. Paying in several instalments will mean that it will be much easier for you to pay in full come the tax deadline.

Get help if you’ve missed the tax deadline

If you’ve missed the tax deadline then the first thing you should do as soon as possible is file your tax return, even if it is after the deadline date. We can help you calculate your personal tax liability as well as submit it online to HMRC so that it’s done quickly and as stress-free as possible. Contact us today if you would like help with your self-assessment tax return.