Penalties for late returns and late payment of tax

• Income tax
• Corporation tax
• PAYE
• CIS
• VAT
• Limited company accounts

Income tax self assessment	From 6 April 2011
Standard penalties for filing late:
One day late	£100
Three months late	£10 per day up to a maximum of £900
Six months late	Further penalties calculated on the greater of 5% of tax due on £300
For failure to notify liability or for inaccuracies in a return: Failure not deliberate: up to 30% of tax Failure deliberate but not concealed: up to 70% of tax Failure deliberate and concealed: up to 100% of tax
Standard penalties for paying late:
Thirty days late	5% of the unpaid tax due at that date
Six months late	A further 5% penalty of the tax that remains unpaid at the date
Twelve months late	A further 5% of the tax that remains unpaid at the date
OTHER PENALTIES: Failure to keep and retain tax records: up to £3,000 per year of assessment False statements to reduce interim payments: up to the shortfall of tax Failure to produce documents or obstructing an inspection: £300 plus daily penalty of £60 The Upper Tribunal may impose a penalty where significant tax is at risk.

Corporation tax self assessment	2011/12	2010/11
First and second late returns - up to 3 months late	£100	£100
Third consecutive late return - up to 3 months late	£500	£500
First and second late returns - 3 - 6 months late	£200	£200
Third consecutive late return - 3 - 6 months late	£1,000	£1,000
Returns more than 6 months late	10% of tax outstanding	10% of tax outstanding
Returns more than 12 months late	20% of tax outstanding	20% of tax outstanding
For failure to notify liability or for inaccuracies in a return: Failure not deliberate: up to 30% of tax Failure deliberate but not concealed: up to 70% of tax Failure deliberate and concealed: up to 100% of tax OTHER PENALTIES Failure to keep and retain tax records: up to £3,000 per year of assessment False statements to reduce interim payments: up to the shortfall of tax Failure to produce documents or obstructing an inspection: £300 plus daily penalty of £60
PAYE
Year end return (form P35) and related forms		£100 per 50 employees per month (or part)
Form P11D(b) where due		£100 per 50 employees per month (or part)
Forms P11D		£300 per form
For 2011/12 end 2012/13 The penalty is based on the number of items the employer has failed to deliver:
Number of items Penalty 1-2 £0 3-49 £100 50-149 £300 150-299 £600 300-399 £900 400-499 £1,200 500-599 £1,500 600-699 £1,800 700-799 £2,100 800-899 £2,400 900-999 £2,700 1,000 or more £3,000
CIS
Monthly return - CIS 300	£100 per 50 subcontractors per month	£100 per 50 subcontractors per month
Failure to provide information	£3,000	£3,000
VAT : default surcharge periods
First return in surcharge period	2%	2%
Second return in surcharge period	5%	5%
Third return in surcharge period	10%	10%
Fourth and subsequent return in surcharge period	15%	15%

Notes

1. The fixed penalties for late self assessment returns cannot exceed the tax outstanding on the due date for the return. If all of the tax has been paid the fixed penalty is zero. This does not apply to partnership and trust returns and this 'cap' is due to be withdrawn shortly.
2. VAT default surcharge also applies when the VAT return has been submitted but the VAT remains unpaid. The penalty is calculated at the rate shown applied to the VAT outstanding. Late repayment returns still register as a default, but no penalty is due.
3. Penalties at 2% and 5% are not levied if the amount of the penalty does not exceed £400, but the default still registers and increases the potential penalty for the next default.

Late payment penalties

Self Assessment

Penalties of 5% of the tax unpaid are charged one month and six months after the due date for tax payment (31 Jan) on 28 February & 31 July.

VAT

The default surcharge penalty system also applies to late payment of VAT liabilities, even if the return is filed on time.

PAYE, NIC and CIS tax

There is a penalty regime under which late payment of PAYE, NIC and related liabilities during the tax year will attract a penalty. The first late payment in the tax year is not liable to penalties but subsequent late payments attract a penalty base on the total number of late payments in the tax year.

Number of defaults	Penalty %
1	0
2,3,4	1%
5,6,7	2%
8,9,10	3%
11 or more	4%

Tax is due by 19th of the following month or 22nd if paid electronically. Small employers may use the quarterly payment scheme.

Limited company accounts – late filing penalties

Penalties for late filing are as follows:

Length of delay, based on the filing date	Private company	Public company
Not more than one month	£150	£750
More than one month but not more than three months	£375	£1,500
More than three months but not more than six months	£750	£3,000
More than six months	£1,500	£7,500

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