It’s important to file your tax returns on time. Whether it’s filing a self-assessment tax return or a corporation tax return, ensuring they’re completed on time is vital.

Late or unpaid tax returns come with some negative consequences, which some people remain unaware of. To learn more about what happens if you don’t file a tax return in the UK, continue reading.

Understanding Tax Returns

For some, tax returns can be a little complex to understand. Essentially, a tax return is an important document that’s submitted either online or in paper form.

Tax returns are sent to HMRC each year and show details of your income and any costs. Using the figures provided, HMRC then calculates how much tax you owe. We all should pay tax on time – returns are typically for one individual or an organisation.

Self-Assessment Tax Returns

Individuals will need to file a personal tax return, whereas companies must file a corporation tax return. Self-assessment is a system used by HMRC to collect taxable income from people.

If you receive some income or capital gains that haven’t been automatically taxed through your employer’s payroll or PAYE system, you’ll be required to file a self-assessment tax return.

Corporation Tax Returns

If you get a notice to deliver a company tax return from HMRC, you will need to do so. Companies in the UK must file corporation tax returns. It’s important to abide by HMRC when you receive a notice from them to provide a company tax return – especially if you want to avoid any issues.

To successfully file your tax return on time to avoid late payment penalties, you’ll need to figure out both your company’s profit and loss (which is different to any profit or loss shown in your annual accounts). You’ll also need to work out your corporation’s tax bill.

Although you can do this yourself, most companies work with an accountant.

The Importance of Filing Your Tax Return

Filing your tax returns is essential. Keeping on top of your tax returns, whether it be for yourself or your company, means that you can stay on top of your tax liabilities while avoiding any stress about getting them done on time.

By completing your tax return, you can avoid the late filing penalties HMRC gives. Additionally, if you’re owed any tax, you’ll receive repayments much quicker by filing your tax returns early or on time. There are also several other key reasons why filing your tax returns is important, including:

Legal obligation
Helps to avoid penalties or interest
Maintains financial records
Increases eligibility for loans or mortgages

Failing to File Your Tax Return

Undoubtedly, leaving tax unpaid will cause some issues. Failing to file your tax returns on time can be detrimental, often leading to fines and penalties. Regardless of whether you’re filing your own tax return, or a company tax return, ensuring it’s completed on time is key.

Late Self-Assessment Tax Return Penalties

If you miss the deadline for your self-assessment tax return, you’ll be charged for late payments. You’ll be required to pay £100 if your tax return is up to three months late, and even more if it’s left longer. In addition to this fee, you’ll also be charged interest.

Before filing your self-assessment tax return, you’ll need to ensure that all the information is correct. Keeping records of bank statements or receipts is a good way to make sure you’re filing your return properly. The deadlines for filing self-assessment tax returns are as follows:

Paper – complete by midnight, October 31, 2024
Online – complete by midnight, January 31, 2025 (end of the tax year)

Late Corporation Tax Return Penalties

Similar to self-assessment tax returns, filing your corporation tax return is just as important. If HMRC requests that you deliver a company tax return, you must do so.

Failing to do so can lead to penalties, which no business wants to receive. The deadline for corporation tax returns is 12 months after the end of the accounting period it covers. As discussed, missing this deadline will result in a penalty.

Can You Appeal Against Penalties?

Yes – you can appeal against penalties given by HMRC for late tax returns. According to the HMRC website, you can appeal against a penalty for:

Inaccurate returns
Late returns
Paying tax late
Failing to keep records

Although appeals aren’t successful in every case, your penalty can be either amended or cancelled completely if you provide a reasonable excuse. The excuse you give should be genuine and honest.

The most reasonable excuses are that you’ve had to stay overnight in the hospital, your partner or close relative passed away, your computer or software failed as you were preparing your online return, or postal delays, to name a few. Some excuses simply aren’t accepted, such as:

The HMRC system was too difficult to use
You didn’t get a reminder
Your cheque bounced or payment failed due to low funds
A mistake was made on your tax return

Are You Seeking Expert Tax Advice?

If you require expert assistance and advice from a team of reputable accountants, look no further than DH Business Support. We consist of a hard-working and driven team of professionals who work with a wide range of clients.

We understand that tax returns can be difficult to stay on top of, which is why we’re here to help. We work closely with our clients, offering guidance, support, and expertise. Our invaluable tax advice allows you to better understand tax returns in the simplest possible way.

With a vast amount of knowledge in areas of tax, including personal tax, corporation tax, and inheritance tax, among others, you can rest assured that you’re in trusted hands.

Our team of professionals will remain by your side to ensure you’re given the best service. We can help you better understand your tax obligations and income tax liability while providing you with information on how tax returns work.

If you’d like to find out more about our services, please get in touch today. We look forward to hearing from you soon.