If you are carrying out day-to-day business activities in the UK, there will be many filing deadlines that you are required to meet. This may cause late filing penalties if you fail to do so. No businessman will ever want to go through the unpleasant experience of getting charged with penalties, but sometimes unintentional mistakes in the filing can make you face penalties still. However, if you have a valid reason and solid grounds, you can always appeal against the penalty. This blog has got you covered in this regard. So, let us dive in further to learn more.
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What are Late Filing Penalties?
Filing taxes and other financial documents on time is crucial in the UK to avoid penalties. Late filing penalties are fines imposed by HMRC for failing to file tax returns, accounts, or other documents by the deadline. There are several types of late filing penalties in the UK. This includes self-assessment penalties for individuals who fail to file their self-assessment tax return on time. Corporation tax penalties are for companies that fail to file their corporation tax return on time. VAT penalties are for businesses that fail to file their VAT return on time, and PAYE penalties are for employers who fail to file their PAYE return on time.
To avoid late filing penalties, it’s essential to file your tax returns and other documents on time. You can also register for online filing to avoid paper-based filing deadlines and set reminders for filing deadlines to ensure you don’t miss them. File your tax returns and other documents early to avoid the last-minute rush, and seek professional help if you’re unsure about filing deadlines or procedures.
How do You Handle it If You are Charged Late Filing Penalties?
Check the penalty notice to see if it is a Self-assessment, Corporation Tax, VAT, or PAYE penalty, how much the penalty is, and when the penalty needs to be paid. You can also do the following steps.
Step 1: Check for Errors
Review the penalty notice carefully to ensure there are no errors. Check for incorrect filing dates, incorrect tax amounts, or incorrect penalty amounts. If you find an error, contact HMRC immediately to dispute the penalty.
Step 2: Pay the Penalty
If the penalty is correct, you’ll need to pay it. Make sure to avoid further penalties by paying on time and keeping a record of the payment, including the date and amount.
Step 3: Appeal the Penalty
If you disagree with the penalty, you can appeal. You’ll need to write to HMRC explaining why you disagree with the penalty and include any supporting evidence, such as receipts or bank statements. HMRC will review your appeal and respond.
Step 4: Consider a Payment Plan
If you’re struggling to pay the penalty, you may be able to set up a payment plan. Contact HMRC to discuss how to spread the penalty over several months. Delay payment for a short period.
Step 5: Review and Adjust
Take this opportunity to review your filing procedures to avoid future penalties. Consider filing your tax returns and other documents earlier to avoid the last-minute rush.
What are the Consequences of Avoiding a Penalty?
The financial penalties for avoiding penalties in the UK can be substantial. HMRC can impose penalty charges, interest charges on unpaid tax and penalties, and fines for serious offences. A percentage of the tax owed. Avoiding penalties can damage your reputation and credibility.
If you’re found to be non-compliant, customers and suppliers may lose trust in your business, making it harder to secure loans or credit. In severe cases, avoiding penalties can lead to imprisonment. If you’re found guilty of tax evasion, you may face prison. Tax avoidance can make you face up to 2 years in prison, and false accounting can make you face up to 7 years in prison.
How to Appeal a Late Filing Penalty?
Receiving a late filing penalty in the UK can be stressful and overwhelming, especially if you believe it’s unfair or incorrect. Fortunately, you have the right to appeal against late filing penalties. Let us see the process of appealing late filing penalties in the UK, including the steps to take, the grounds for appeal, and the deadlines for submitting an appeal.
Step 1: Understand the Penalty
Before appealing, it’s essential to understand the penalty you’ve received. Check the penalty notice to see how much the penalty is and why the penalty was imposed.
Step 2: Check the Deadline
Ensure you submit your appeal within the deadline. The deadline for appealing late filing penalties is 30 days from the date of the penalty notice for Self Assessment and Corporation Tax Penalties and 30 days from the date of the penalty notice for VAT penalties. It becomes 45 days from the date of the penalty notice for PAYE penalties.
Step 3: Gather Evidence
To support your appeal, gather evidence that explains why you missed the filing deadline. This may include proof of postal delays, IT issues, or other mitigating circumstances, statements from colleagues, friends, or family members who can vouch for your circumstances. Doctor’s notes or medical certificates if you were ill or incapacitated.
Step 4: Complete the Appeal Form
Use the appeal form provided by HMRC to submit your appeal. Ensure you explain why you believe the penalty is unfair or incorrect, attach relevant documentation to support your appeal, and provide your name, address, and contact number.
Step 5: Submit the Appeal
Submit your appeal to HMRC within the deadline. You can send the completed form to the address provided by HMRC, send the completed form to the email address provided by HMRC, and use the HMRC online portal to submit your appeal online through the HMRC portal. You can appeal against late filing penalties if you have a valid reason for missing the deadline, such as illness, bereavement, or postal delays. Or HMRC made an error in imposing the penalty; the penalty is unfair or disproportionate to the circumstances.
How to Request Penalty Payment in Instalments?
Receiving a penalty notice from HMRC can be stressful, especially if you’re struggling to pay the penalty in full. Fortunately, HMRC offers the option to pay penalties in instalments, helping you spread the cost over a period. In this section, we’ll explore the process of requesting penalty payments in instalments in the UK, including the eligibility criteria, application process, and repayment terms. To request penalty payment in instalments, you’ll need to meet HMRC’s eligibility criteria.
To request penalty payment in instalments, call HMRC’s Payment Support Team on 0300 200 3822 or write to them at the address on your penalty notice. Explain your financial situation and why you’re struggling to pay the penalty in full. Be prepared to provide financial information, such as your income, expenses, and assets. Propose a repayment plan, including the amount you can afford to pay each month and the number of months you need to pay. HMRC will consider your proposal and may agree to the repayment terms. The instalment period can range from 3 to 12 months; you’ll make monthly payments towards the penalty.
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The Bottom Line
In conclusion, late filing penalties are the worst nightmare for any individual who is working in the capacity of running a business in the UK. However, you can always avoid this experience by being aware of the deadlines so that you never miss them. This will not only help to boost your reputational image of business, but you can easily avoid any late filing penalties. If you are new to the business world in the UK, you can always reach out to our tax professionals to ensure that you never miss a deadline.
Disclaimer: The information about late filing penalties is provided in this article including text and graphics. It does not intend to disregard any of the professional advice.
