I have a new sole trader client who did not submit a tax return for 2010-11. He did not make enough money for any tax to be due so thought he didn't need to do one. I have looked on the HMRC website to work out what the penalties will be. I can see the penalties for late submission will be £100 plus £900 plus £300 for it being a year late. Can anyone tell me what the penalty will be for him not having notified HMRC that he needed to complete a tax return?
Given there was no tax due, it is only for tax year 2010/11 and appears to be a geniune mistake by the taxpayer then I would notify HMRC that a 2010/11 tax return is due, and then submit the return withing 3 months of date of receiving notification to submit a tax return. I wouldnt expect HMRC to raise any penalty or interest on this occasion and if they do would appeal on the grounds that they didnt suffer any loss as there was no tax due.
Thanks for your reply. I saw the document in the link when I was looking but it doesn't give any indication of what the amount would be.
Do you think they would still charge the £1300 for late filing or would that not count as he had not been told he had to do a tax return? Or are you saying there wouldn't be any penalty at all? I had assumed that because he should have notified them they would say he should have submitted a return by last January so it would be a year late. But if they tell him he has to submit one now would it be counted as on time if we do it within 3 months?
Given they havent received a notice to do a tax return, given it is 2010/11 tax return and given there isnt any tax due then I would be looking for no penalty to be assessed provided submitted within 3 months of notice if it was my client.
At the moment the return isnt late as this only kicks in if they havent received a notice which they havent as they failed to notify. The penalty for failure to notify are based on the tax liability and as there is none then shouldnt be any penalty.
I recently did a tax return for one of my clients for 2010/11. They were similar to your client in that they hadnt notified HMRC they had to do one however they had tax liability of approx £1k. There penalty was based on 10% of the tax liability that should have been paid by 31 January 2012 but was between 6 and 12 months late and not on the fact that the return was late as we submitted it within 3 months of the date of notice.
