Millions of Britons have just a few weeks remaining before they are hit with automatic fines that could reach £900.
More than 5.4 million Britons have until January 31 to submit their Self Assessment tax returns.
Daniel McAfee, Head of Legal Operations at Lawhive said: “Missing the January 31 deadline triggers an automatic £100 penalty, even if no tax is owed.
“Further delays can lead to additional penalties, which escalate over time, alongside interest on unpaid amounts.”
Persistent non-compliance could result in serious legal repercussions, including debt collection measures and County Court Judgments that may damage professional reputations.
Failing to meet the deadline incurs a £100 penalty, even if no tax is owed.
After three months, daily £10 penalties (up to £900) apply, plus additional fines of five per cent of the tax owed or £300 (whichever is greater) after six and 12 months.
The Self Assessment deadline is this month
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Not paying on time adds further five per cent penalties on unpaid tax at 30 days, six months, and 12 months, along with interest on the outstanding amount
McAfee said: “Failure to act can result in HMRC instructing debt collectors or pursuing a County Court Judgment.”
For professionals, these consequences extend beyond financial impact as a CCJ can have severe career implications, such as affecting their ability to hold director positions or damaging their professional reputation.
Taxpayers can appeal penalties by demonstrating reasonable excuses, such as family emergencies, technical issues with HMRC’s system, or illness.
McAfee highlights several critical mistakes that taxpayers frequently make when filing returns.
He said: “Many filers omit income sources or input incorrect figures,” emphasising the importance of double-checking all entries.
A common misconception is assuming HMRC will notify individuals if they need to file. “Responsibility for determining whether you need to file lies with the individual, not HMRC,” McAfee states.
PAYE employees often wrongly believe they don’t need to file returns, even when they have additional income sources. Rushing to complete returns at the last minute significantly increases error risk.
McAfee advises against overlooking allowable expenses: “Overlooking allowable expenses such as home office costs, mileage, or professional subscriptions can result in overpaying tax.”
He recommends maintaining detailed records throughout the year for accurate deduction claims.
For those struggling to pay their tax bill, McAfee emphasises the importance of immediate action.
He said: “Contact HMRC immediately to request a Time to Pay Arrangement, which allows you to spread the payment over an agreed period.”
Filing the return remains crucial even when full payment isn’t possible. He explained that Britons should ensure they file their return on time, even if they can’t pay the full amount. Filing late incurs separate penalties from payment delays.
He recommends seeking financial advice to explore additional options. For sole traders facing irregular income challenges, McAfee suggests practical solutions.
“Using dedicated apps or software to log income and expenses in real time” can help manage tax obligations, McAfee said.
He also recommends “keeping a portion of your earnings aside (e.g. 20-30 per cent) to cover tax liabilities.”
McAfee outlines crucial steps to protect against tax-related scams during self-assessment season. He explained that HMRC will never ask for sensitive information such as passwords or bank details via email, text, or phone.
Taxpayers should verify all communications through official channels.
He added: “Always cross-check communications by logging into your HMRC account or calling their official helpline.”
He warns against clicking links in unsolicited messages, recommending typing the HMRC website URL directly. Suspicious communications should be reported promptly.
