About Penalties

If you are late to file any aspect of your income, whether it be your Self Assessment Tax Return, your VAT Return, your Annual Accounts, your Corporation Tax Return or your PAYE Returns, you will be charged penalties by HM Revenue & Customs and Companies House, interest on any outstanding liabilities will also be charged.

Historically, HM Revenue & Customs have been very lenient with penalties and you could successfully appeal against them very easily. However, their stance on these penalties has recently changed and these days, penalties will never be reversed unless certain specific circumstances have prevented you from filing on time.

It is therefore more important than ever to be up to date with your affairs so that your money isn’t “wasted” by penalties that could have been avoided. Here is a summary of the most common penalties:

Self Assessment Penalties

If you file your Self Assessment Tax Return late or pay any liabilities due from your Self Assessment Tax Return late, you will be charged penalties by HM Revenue & Customs.

Penalties are charged as follows:

1 day late - A penalty of £100.00 (this applies even if no Income Tax is due)

3 months late - After 3 months, a charge of £10.00 per day is applied up to 90 days. This is charged as well as the above penalties.

6 months late -A penalty of £300.00 or 5% of any outstanding Tax, whichever is higher. This is charged as well as the above penalties.

12 months late -A penalty of £300.00 or 5% of any outstanding Tax, whichever is higher. This is charged as well as the above penalties.

VAT Penalties

If you file your VAT Returns late or pay any liabilities due from a VAT Return late, you will be charged penaties by HM Revenue & Customs.

Penalties are charged as follows:

First time late - No penalty

Second time late - 2% of your unpaid VAT

Third time late - 5% of your unpaid VAT

Fourth time late - 10% of your unpaid VAT.

Fifth time late - 15% of your unpaid VAT

PAYE (payroll) Penalties

If you pay your PAYE liabilities late, you will be charged penaties by HM Revenue & Customs.

Penalties are charged as follows:

1 to 3 times late in a tax year - 1% of the late payment amount is charged as a penalty

4 to 6 times late in a tax year - 2% of the late payment amount is charged as a penalty

7 to 9 times late in a tax year - 3% of the late payment amount is charged as a penalty

10 times late in a tax year - 4% of the late payment amount is charged as a penalty

Construction Industry Scheme (CIS) Penalties

If you file your CIS300 Returns late, you will be charged penalties by HM Revenue & Customs.

Penalties are charged as follows:

1 day late - £100.00 fixed penalty (even for nil Returns)

2 months late - £200.00 fixed penalty (even for nil Returns)

6 months late - £300.00 or 5% of the liabilities due from
the Return

12 months late - £300.00 or 5% of the liabilities due from the Return

Therefore a total of at least £900.00 can be charged for a CIS300 Return that is 12 months late. Please note - these penalties are charged on each monthly CIS300 Return that is late e.g. if 4 CIS300 Returns are late by 12 months, a minimum of £3,600.00 will be charged even if the Returns were nil.

Penalties charged can be complex and vary
from the type of taxations due, we are here to help and make sure that you will never incur a penalty. Please contact us to find out more.