What Happens If I Default On My Tax Return?

If you receive a tax return in the post, you are legally obliged to complete it, even if you don’t think that it applies to you.

If you feel that you don’t need to complete your tax return, it’s important that you ring HMRC and they’ll be able to check for you. Don’t just ignore it as this can and will have consequences.

Are there any circumstances where HMRC will withdraw the tax return?

There are several reasons why HMRC will withdraw the tax return if there is a mistake on their part. All of your income may be taxed under PAYE, for example. If you think your tax return does not apply to you, you have two years from the end of the tax year to ask HMRC to withdraw the return.

You can reach HMRC’s self assessment helpline on 0300 200 3310.

…and if I fail to submit my tax return altogether?

If you fail to complete and submit your tax return, HMRC will issue you with a fine. They’ll also issue you with a ‘determination’ – this is an estimated tax bill that will stand until your actual tax return has been sent in. Once three months has passed, there will be a £10 daily charge, which can go up to a maximum of £900. The charges increase after six months, and then again after twelve months.

How long do I have to complete the tax return under these circumstances?

Once you’ve been issued with an estimated tax bill, you have three years from the 31st of January filing date to send in your tax return. If your bill has not been estimated, you have four years from the end of the tax year in which to send the completed tax return.

I’m not going to be able to file my tax return on time, what should I do?

If you fail to file your tax return on time, you will automatically incur a £100 fine – even if no tax is owed. HMRC have a list of what they class as ‘reasonable excuses’, which can be used to appeal against the fine. These are as follows:

• Your partner died just before the payment deadline
• You had an unexpected stay in hospital, which interfered with your ability to submit your tax return
• Your computer or software failed just before or while you were preparing your online tax return
• There were ‘service issues’ with HMRC website, which prevented you from being able to submit your tax return
• A fire prevented you from submitting your tax return
• Unexpected postal delays

If you file your tax return incorrectly, you could be subject to an HMRC criminal investigation. If this is the case, you’ll need expert legal advice and representation from the start. Please don’t hesitate to contact us to guide you through the process.