Guide to late filing penalties

Guide to late filing penalties

It’s really important to file your taxes on time! If you don’t, you can face penalties from HMRC.

There are several different taxes you may need to pay if you run a small business or work self employed. You can find out more about the taxes you may need to pay here.

Remember, you can always appeal against a penalty if you have a reasonable excuse!

Self Assessment tax return penalties

If you aren’t a PAYE employee, you will be required to submit a Self Assessment tax return each year to declare your income tax. If you miss the deadline for submitting it or paying your bill you’ll get a penalty.

If your tax return is up to 3 months late your penalty is £100. If you pay your tax bill late, or your tax return is later than 3 months you’ll need to pay more, and be charged interest on late payments. You can estimate how much this would be on the HMRC website.

Company Tax Return penalties

If you run a limited company you need to file a Company Tax Return if you get a ‘notice to deliver a Company Tax Return’ from HMRC. You need to do this even if you don’t have any Corporation Tax to pay.

If you miss the deadline the amount of penalties you pay will go up over time:

Time Penalties
1 day £100
3 months Another £100
6 months HMRC estimates your bill (tax determination) and adds 10% of the unpaid tax
12 months Another 10% of unpaid tax is added


Note that if your tax return is late 3 times in a row the £100 penalties go up to £500. It’s important to know that you can’t appeal against your tax determination.

VAT Return penalties

Businesses that earn over £85,000 will need to pay VAT on goods and services. You can also voluntarily register to pay VAT if your turnover is under this amount.

If HMRC don’t receive your VAT Return by the deadline, or your full payment hasn’t reached their account by the deadline they will record a ‘’default’. This means that you could enter a 12 month ‘surcharge period’.
If you default again during your surcharge period, it could be extended for another 12 months and you could pay extra on top of the VAT you owe.

You can avoid paying a surcharge by:

  • Paying your VAT by the deadline
  • Having no tax to pay
  • You are due a VAT repayment

What is a surcharge?

A surcharge is a percentage of the outstanding VAT for the period that is in default. If you default again in the surcharge period, this will increase.

How much your surcharge is depends on your annual turnover. You don’t pay a surcharge on your first default. You can check the penalty amounts on the HMRC website.

Making Tax Digital

HMRC can charge you a £400 penalty if you submit a paper VAT Return. Unless you are exempt from Making Tax Digital regulations, you will need to submit your return using a compatible digital software.

Manage your finances with Bokio

Keeping a close eye on your finances is really important to understand which taxes you need to pay. Using an accounting software like Bokio is a great way to see how much profit you are making in your business.

With Bokio accounting software, you can do your bookkeeping, invoicing, and manage your finances in the same place. We have everything you need to help you prepare for your Self Assessment tax return, submit your VAT Return for Making Tax Digital and keep the right financial records. If you need an extra hand, we can help you find an accountant to work with.

Accounting is kept simple with Bokio, so you have more time to spend running your business.