Tax is something that all of us are familiar with. However, sometimes due to carelessness, when you forgot about paying taxes, you can be charged with penalties. And, mind you, such penalties can be very expensive and make a dent in your bank account.

If you are a business owner, you need to be very careful and stay away from penalties in order to run your business efficiently.

Self-assessment tax is one such tax for which penalties are charged in case if you fail to file and pay at right time before hitting datelines. It is a tax imposed by HM Revenue & Customs (HMRC). Late filing and late payments of such tax can result in penalties which increase over time.

Late filing

Missed filing- £ 100 penalty
3 months late filing- Daily £10 penalty for upto 90 days (max £900)
6 months late filing- 5% of tax due or £300 (whichever is greater)
12 months ( 1 year) late filing- 5 % of tax due or £ 300 (whichever is greater) -Unless the tax payer is upholding information intentionally that can help HMRC to access the tax due.

Late payment

30 days late- 5% of tax due
6 months late- 5% of tax outstanding at that date
12 months late- 5% of tax outstanding at that date

Being a tax payer, you can also appeal within the 30 days against the tax penalty with HMRC. If fail to do so, a late appeal may be accepted at the judgment of HMRC.

HMRC also has a statutory requirement to take under consideration. And, that is if any ‘special circumstances’ exist, it may overrule the statutory penalties and reduce them. If they do not take such circumstance into account, the decision made by them will be viewed as unstable.

However, in May 2015, HM Revenue & Customs has said that any late filing penalty appeal will not be tested if a reasonable excuse for late filing has been provided and an appeal has been made.

Tip- Mark all the important dates of deadlines to ensure you make right payments in timely manner and do not get any penalties.