HMRC Penalties

Personal Tax

Self Assessment Tax Returns have to be submitted no later than 31st January after the tax year e.g. 2011/12 Tax Returns are due no later than 31st January 2013.

People who take their time getting round to submitting their self assessment Tax Returns got a big shock this year. Their 2010/11 Tax Return was due to be submitted by 31st January 2012. If it had not been submitted by 31st July, they received a penalty notice for £1200!

If their 2010/11 Tax Return has still not been submitted by 31st January 2013, they will get another penalty of at least £300 or more if 5% of the tax they owe is higher than £300. In cases HMRC regard as serious, they could get a 100% penalty effectively doubling their tax bill!

Company Tax

Company tax is known as Corporation Tax and Returns have to be filed 12 months after the end of a company’s accounts year (although companies have to pay their Corporation Tax 9 months after the end of their accounts year). There are penalties if the Corporation Tax Return is late – £100 rising to £200 if it is more than 3 mths late and there are higher penalties if the Return is even later. The £100 and £200 penalties rise to £500 and £1000 respectively if a Company has been late with its Return 3 years running.

VAT Returns

VAT Returns have to be filed within a month of the end of a VAT Quarter for safety e.g. VAT Return for 30.9.12 should be filed by 31.10.12, although HMRC have been allowing a few extra days to encourage online filing. Payment of the VAT has to be made at the same time as the VAT Return is filed or the VAT Return counts as late.

Penalties for late VAT Returns are a percentage of the VAT payable.

The first time the VAT Return is late there is no penalty and HMRC are supposed to send the business a warning letter but often none are received.

The second time a VAT Return is late, a penalty of 2% of the VAT can be charged, the third time 5%, the fourth time 10% and the 5thtime 15%. HMRC may not charge a penalty if it is less than £400. So a trader who keeps being late even if only a day or so may think everything is fine until he submits another VAT Return late and gets a penalty at say 15% of the VAT and it will come as a big shock.


Many businesses, even ‘one man bands’, trade as limited companies nowadays. Company accounts have to be submitted to HMRC 9 mths after the end of their accounts year. There are penalties if they are late. The amount of the penalty depends on how late the accounts are, ranging from £150 to £1500 for being more than 6 months late, and these penalties are doubled if a company has been late 2 yrs running!


Companies have to submit a Return to Companies House once a year to confirm the directors, shareholders, registered office, etc have not changed. Although there are penalties for late returns, Companies House tend to strike the Company off after a couple of warnings. Any money in Company bank accounts is then frozen and the directors/shareholders may never get it back!

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