Almost one million people missed the 2020 tax deadline, and HMRC has accumulated close to £100m in immediate fines. Around twelve million people were expected to file a tax return, and 700,000 of them waited until the deadline day to do it.
It is a significant improvement on last year when over a million people didn’t file their personal tax return, but it still means that hundreds of thousands of people will be getting a fine through the door.
What Do I Do Now?
Whatever you do, do not try to avoid the fine. The bottom line is that you have got to pay it, and there’s no way of avoiding it. The longer you leave it, the higher the fine will be because HMRC will add interest to your fine.
A Reasonable Excuse
The only way that you can appeal the penalty is if you have a reasonable excuse. These excuses include the death of a partner or close relative, being admitted to hospital, and having a life-threatening illness. Other excuses include fire, flood, or theft preventing you from filing the return, unpredictable postal delays, and service issues with the HMRC. You will need to provide evidence in order to appeal the fine, and you are never guaranteed to win the appeal.
Unacceptable Excuses
While HMRC will be lenient if you have a legitimate excuse, poor ones will not be accepted. Relying on someone else to file it for you is not an excuse, nor is a bounced cheque or financial strain. Not being able to work through the website is also not an acceptable reason. A common reason we always hear is that HMRC didn’t send a reminder, and this too is not an acceptable reason.
How To Avoid Another Fine
The best way to avoid a late-filing penalty is to be prepared for the next year. You know when the deadline is, and you know the repercussions of being late with it. Set aside money each month to put towards your bill, 20% of your profit is usually sufficient unless you are in the higher tax bracket. Keep up to date with your accounts, and keep in touch with your accountant.
If you have struggled with the deadline because you can’t head your head around your accounts, perhaps now is the best time to get an accountant to do it for you. If you need a helping hand to avoid a fine in 2021, get in touch and see what we can do for you.