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05 Dec 2016

It's TaxReturnTime; there's no need to be afraid
At Citroen Wells, we let in light and we banish shade
And in our world of tax experience we can spread a smile of joy
Give us your P60 at TaxReturntime

But say a prayer to pray for the other ones
At TaxReturntime
It's hard, but when you're having fun
There's a world outside your window
And it's a world of dread and fear
Where the only water flowing is the Inspector’s crocodile tears

And the TaxReturn countdown bells that ring there
Are the clanging chimes of a £100 penalty
Well on 1 February thank Citroen Wells it's them instead of you
And they won't know what to do after 31 January
The only cards they’ll get, are their cards marked for daily penalties
Do they know it's TaxReturntime at all?

Here's to you, raise a glass for ev'ryone
Here's to them, underneath a pile of unopened brown envelopes
Do they know it's TaxReturntime at all?
Heed our words
Heed our words

Heed our words
Let them know it's TaxReturntime again
Heed our words
Let them know it's TaxReturntime again

Penalties for late filing of tax returns - a reminder

With the 31 January deadline fast-approaching, here is a reminder of the penalties for late submission of tax returns and late payment of tax with the most imminent in bold.

If you have not already done so (this email is being sent to all our clients), please let us have the tax return information for the year ended 5 April 2016 straight away.

For filing a return late:

  1. A £100 penalty immediately after 31 January 2017 whether or not the tax has been paid and even if no tax is due.
  2. Daily penalties of £10 per day for returns that are more than 3 months late, running for a maximum of 90 days from 1 May 2017.
  3. Penalties of 5% of tax due for the 2015/16 return period (or £300 if greater) if the return is not filed by 31 July 2017 and again if not filed by 31 January 2018.
  4. A higher penalty, ranging between 70% and 140% of the tax due where, by failing to submit a return for over 12 months, a person deliberately withholds information which would assist HMRC to assess the tax due (100% - 200% penalty if done deliberately with concealment), subject to a minimum penalty of £300.

The penalties/surcharges for late payment of any tax due will be:

  1. A penalty of 5% of the amount of 2015/16 unpaid tax outstanding at the close of 2 March 2017.
  2. Further penalties of 5% of any amounts still unpaid at 31 July 2017 and 31 January 2018.
  3. Suspension of late payment penalties where the taxpayer agrees a time to pay arrangement (where a tax debt is paid over time) with HMRC. This should be done before the tax becomes due.

Interest (currently at a rate of 2.75%) is charged on tax paid late and on unpaid penalties. There should be no penalty during a period for which there is a reasonable excuse for being late. Filing a return late extends the period during which HMRC can commence an enquiry into a return.


Please note the distinction between tax due for the return period and unpaid tax – late filing penalties are levied on the full amount of tax due for 2015/16 whereas the late payment penalties are applied to the amount of unpaid tax.

For 99% of Citroen Wells clients the filing deadline is 31 January 2017 for returns for the year ended 5 April 2016. An individual filing in August 2017, being just over 6 months late with his or her return, will face penalties of at least £1,300!

For partnership/LLP returns the late filing penalties apply per partner/member and not to the partnership/LLP itself. For example, if there are ten partners the penalties will be £13,000, if the partnership return is more than 6 months late.

Filing late or close to the 31 January can have a knock-on effect on other tax penalties. The ICAEW guidance on penalties for inaccuracies in tax returns advises:“Although the HMRC guidance does not specifically refer to the timing of providing information, it is clear that in assessing culpability for a careless error HMRC would not look kindly on a client who had submitted their accounting records late in January after much prompting.”

Generally, there should be no penalty for an inaccuracy in a tax return if reasonable care has been taken. In order for us to protect the interests of a client, it is important that we receive information on a timely basis to complete the tax return, review it and resolve any outstanding points in good time before the submission deadline, which are all elements of taking care. Therefore, clients should please let us have their tax return information as soon as possible.

Contact us now

The purpose of this bulletin is to alert you to the risk of penalties in general terms. For further advice, please telephone or email your usual contact partner.

This memorandum is for guidance only and professional advice should be obtained before acting on any information contained herein as no responsibility can be accepted by Citroen Wells for loss occasioned to any person as a result of action taken or refrained from in consequence of its contents.