Late filing regime – new penalties from April 2011

The new penalty regime for late filing and late payment of self assessment income started in April 2011. One of the most significant changes is that penalties will still be payable even if you have no tax liability or you have already paid the tax liability.

As before a return filed late (whether online or paper) will incur a £100 penalty on day 1. However, unlike the old rules, the penalty will no longer be reduced to the amount of tax outstanding or nil if there is no tax liability. Furthermore, under the old rules another £100 penalty was not incurred until the return was 6 months late. This has now changed so a penalty of £10 per day is incurred once the return in 3 months late. As soon as the return is 6 months late a further penalty of £300 or 5% of the tax due arises, whichever is the higher. The 6 month penalty is applied again if the return is 12 months late (i.e. £300 or 5% of tax due)

A return filed 6 months late could now potentially incur a late filing penalty of £1300 under the new rules as opposed to £200 under the old. These penalties are in addition to the interest and surcharges applied to all amounts of tax (and unpaid penalties) outstanding.

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