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The price of late-filed returns and failure to pay tax on time
KEY POINTS
- Penalties rapidly multiply in cases of prolonged failures particularly where the failure to file is deliberate.
- Case law clarifies meaning of “reasonable excuse” which should be considered based on the case’s facts and circumstances where it is not precluded by the legislation.
- It is important to demonstrate how the reasonable excuse impeded submission or payment.
Failing to submit a tax return or to pay a liability on time may at first glance seem less serious than submitting a return that is wrong. Think again.
The FA 2009 penalty regime which applies to both types of failure makes either a costly business. Moreover once a return is more than 12 months late the penalty can be just as punitive as that for having submitted a return that under-represented a taxpayer’s liability.
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