New penalty regime for late filing and late payment of Income Tax Self Assessment

For those who Income Tax Self Assessment (ITSA) applies, HM Revenue & Customs (HMRC) will be issuing 2010/11 notices and paper returns which will include information on the new penalty framework and how it will significantly increase penalties for those who file and pay late.
The new penalties will be issued automatically to all those in ITSA who do not file and pay on time.

New penalty regime

The new penalty regime for ITSA 2010/11 returns will be:

Late filing penalties

  • When any return is late, an initial £100 fixed penalty arises the day after the filing date. This applies even if there is no tax to pay or the tax due has been paid on time.
  • Individuals are notified they will be liable for a further daily penalty if the return is not submitted within three months of the filing date. The penalty is calculated at £10 per day, until the return is filed, for a maximum of 90 days (up to £900).
  • After the daily penalties, and if the return is still outstanding six months after the filing date, a further penalty arises, calculated at five per cent of the tax liability on the return or £300 if this is higher.
  • Where the return is still outstanding after 12 months, a further penalty arises, calculated at five percent of the tax liability on the return or £300 if this is higher.
  • If a determination has been made because the return has not been received, the penalties at six and 12 months will be based upon the estimated amount in the determination, and then adjusted retrospectively when the self-assessed amount is returned.

Late payment penalties

  • at thirty days late there will be charged an initial penalty of five per cent of the tax unpaid at that date
  • at six months late and there will be charged a further penalty of five per cent of the tax that is still unpaid
  • at 12 months late there will be charged a further penalty of 5 per cent of the tax that is still unpaid
  • these penalties are additional to the interest that will be charged on all outstanding amounts, including unpaid penalties, until payment is received

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