Penalties for late self-assessment returns

KEY POINTS

• There are two penalty regimes for income tax self assessment: one for late filing and one for late payment.
• Daily penalties apply if a return is more than three months late.
• Further penalties apply if a self-assessment return has been deliberately withheld from HMRC.
• Taxpayers have a legal obligation to notify HMRC of chargeability to tax.
• Claims and elections can affect penalties with unexpected results.

The recent First-tier Tribunal case of Thomas Richter (TC05816 – at here ) has brought the issue of penalties for late filing and late payment to the front of many tax practitioners’ minds. The case concerned a taxpayer’s reasonable excuse for not submitting his tax returns on time and shows that the statutory penalty regime can give rise to financial penalties in excess of those...