Nobody wants to waste money paying penalties for easily avoidable reasons. You know that HMRC and Companies House have a range of deadlines that may apply to you. You also know that there are both immediate and cumulative financial penalties for missing these deadlines.
HMRC places the responsibility for your tax position with you. And these critical dates are crucial to everyone that is not just a straightforward PAYE employee. As a sole trade or limited company, working as a contractor, subcontractor, freelancer or small business your tax head needs to be switched on.
You need to get your paperwork to HMRC by the given deadline, as well as pay your tax bill on time. There are fines automatically issues once a deadline passes and then they relentlessly accumulate as time passes, until you resolve the situation.
The excellent news is that none of this is inevitable, you are in control of the situation. We’ve gathered together the key dates, and their accompanying penalty structures, so you can quickly figure out what applies to you.
This is not an exhaustive list, especially if you are a company director.
Read it through and find the sections that apply to you. Put the deadlines in your diary. But don’t just leave it there. Figure out what you need to do to be able to meet that deadline. None of these procedures are a ‘do it the night before’ job. Talk to your accountant about what they need from you and by when. Then plan this into your work schedule, backwards from the deadline date.
Everything needs to be filled in accurately, sent in the correct way and with the required documentation. If you have all this planned in, you can avoid the receipt search panic nearer the time.
Self assessment Deadlines and Penalties
Paperwork
HMRC must receive your online self assessment tax return by midnight 31st January. Your self assessment tax return for the 2019-20 tax year is due on 31st January 2021.
Penalties
Immediate £100 fine is issued for being one day late with your paperwork. The rest of the fines accumulate, so the longer you leave it the more you owe in late filing fines.
All of these fines are measure from the 31st January deadline until HMRC receives your self assessment tax return:
- £10 per day for up to 90 days
- £300 or 5% of tax due (the larger amount), up to six months late
- The greater amount of either 5% tax bill or £300, overdue by 12 months or more
Payment
You must pay your previous year’s tax bill in full by the same date.
Penalties
The fine for late payment of your self assessment tax bill is an initial 5% of your total, if you pay within 30 days. This is recalculated at 6 and 12 months after the deadline, and a further 5% of the tax you owe at these times is added on.
It’s important to remember that you may meet self assessment criteria for a number of different reasons.
For example if you are car mechanic employed under PAYE and you have spent more than £2500 in any one tax year on tools and toolboxes you will normally need to complete a tax return. The tax return will have to include your capital allowances for tools to ensure you receive the tax relief you are entitled to.
Corporation Tax Return Deadlines and Penalties
Paperwork
Everyone has a different deadline for their CT600 Corporation Tax Return because it is based on your Accounting Period. You must file your CT600 with HMRC within 12 months of the end of your Accounting Period. If it is the first time you are submitting a Corporation Tax Return, it is due 12 months from your first year end.
Penalties
- 1 day late: automatic £100
- 3 months late: £100
- 6 months late: HMRC take over administration of your Corporation Tax and issue an estimated bill with 10% of their total added as a fine. This is called a tax determination. You will have to pay this amount, with no negotiation and submit your Corporation Tax Return.
- 12 months late: Additional 10% of total unpaid tax
If you continue to miss your filing deadline for three consecutive years, the £100 penalties will go up to £500.
Construction Industry Scheme (CIS) Deadlines and Penalties
You must send monthly CIS returns to HMRC by the 19th of each month, after the last tax month. If you are submitting your return for the month of 6th October to the 5th November, it must be with HMRC by the 19th November.
Late Penalties
1 day late: £100
2 months: £200
6 months: £300 or 5% CIS deductions – the biggest amount
12 months: additional 5% CIS deductions or £300 – again, the larger of the two totals
VAT deadlines and penalties
HMRC can give both penalties and surcharges if you are late with your VAT returns and payment.
This is termed ‘defaulting’ with reference to VAT. HMRC will classify you as a defaulter if you don’t submit your VAT return on time and if you don’t pay your VAT bill be their deadline.
VAT deadlines:
You VAT deadline is different for each business because it is based on your Accounting Period dates. Helpfully, your online VAT account shows your VAT return submission and VAT payment deadlines.
What happens if you end up in a default position?
If you default on one payment you could be put in a ‘surcharge period’. This lasts for 12 months, unless you are late again and then another 12 months is added.
VAT Penalties
These surcharges are based on figures from the accounting period you have defaulted on. The amounts are calculated based on a percentage of the VAT you owe.
There is a separate list of penalties that apply if you continue to default during the 12 month surcharge period. Every time you miss a deadline, the amount increases. These fees differ depending on whether your annual turnover is more or less than £150,000
- 1 default: no penalty
- 2 defaults: +£150,000+ – 2% of VAT bill, unless less than £400 when no charge applies
-£150,000 – no charge
- 3 defaults: +£150,000 – 5%, one if under £400. -£150,000 – 5%, none if under £400
- 4 defaults: +£150,000 – 10% or £30. -£150,000 – 5%, none if under £400
- 5 defaults: +£150,000 – 15% or £30. -£150,000 – 10% or £30
- 6 defaults: +£150,000 – 15% or £30. -£150,000 – 15% or £30
In every instance with a choice, the higher amount will be the fine you receive.
VAT Paperwork Penalties
VAT administration mistakes can be very costly. HMRC really do want tax to go fully digital and you will now be charged £400 for submitting a paper VAT return, unless you have their express permission.
If you make a mistake on your VAT return, that HMRC decide is “careless or deliberately inaccurate”, you can be given a fine of 100% of the tax you have over claimed, or understated.
HMRC are not always totally accurate themselves. But if you don’t get in touch about an assessment that’s too low within 30 days, you can be fined 30% of that amount.
Filing annual company accounts
You have to file your annual accounts with Companies House if your business is a limited company. The deadline for filing is nine months from your company’s accounting year end. Public limited companies have a different set of rules, including penalties.
Missing this deadline carries hefty penalties that increase the longer you leave it. If you are also late the following year, these fines automatically double.
- £150 :1 day late
- £375: 3 months late
- £750: 3-6 months late
- £1,500: over 6 months late
Two important things to remember about tax filing. Firstly, not all of these regulations will necessarily apply to your business. Secondly, you don’t ever have to pay any fines. You are in total control of this situation. With just a little bit of information, advance organisation and help from a tax professional, you can make sure you never waste any money on HMRC penalties. Check out our free guides for additional information and give us a call with any queries
