I didn’t realise I needed to submit a tax return and now I got a fine – what do I do?

Alan Bermingham

10 Years of Expertise in Fintech Innovation

4 min read

I didn't realise I needed to submit a tax return and now I have fine details, penalty cancellation procedures, reasonable excuse rules, and HMRC appeal options for late Self Assessment filings for UK taxpayers. Taxpayers receiving an unexpected HMRC penalty notice must first verify whether they were required to file an annual return on form SA100. If a tax return was not required, individuals can request HMRC to withdraw the filing notice, which automatically cancels accrued late filing penalties. If filing was required, taxpayers should submit the outstanding tax return immediately, pay any tax due, and submit an SA370 penalty appeal within 30 days detailing a valid reasonable excuse such as a serious illness, bereavement, or an unexpected emergency. HMRC generally does not accept simply not knowing about the requirement as a valid excuse, so filing the return promptly is essential to prevent further penalties. Utilising Open Banking tax applications like Pie simplifies Self Assessment by tracking filing obligations, calculating real time tax liabilities, and submitting late returns directly to HMRC.

Breaking It Down for You...

Everything you need to know in one place.

Let's take a deep dive into what needs to be done if you forget to file your Self Assessment tax return.

What happens when you get a tax fine you weren't expecting?

That brown envelope from HMRC landing on your doormat can make your heart sink. Especially when you open it to find a fine for not filing a tax return you didn’t even know you needed to submit!

It’s more common than you might think. Many people are caught off guard when HMRC decides they need to complete a tax return, often with little warning or explanation.

The standard penalty starts at £100 if your return is up to 3 months late. However, the financial consequences of late tax returns can be significant, with penalties escalating based on how late the submission is.

If you miss the self assessment tax return deadline, you could face additional fines imposed by HMRC, which can grow much larger if you leave it unfiled for longer, potentially reaching thousands of pounds with added interest. It is vital to report all income sources accurately, especially as HMRC now employs sophisticated HMRC income clustering technology to automatically group your earnings and detect inconsistencies that trigger automatic investigations.

What does "I didn't realise I needed to submit a tax return" actually mean?

This situation typically happens when your tax circumstances change but you weren’t aware of the new filing requirements. Perhaps you started some freelance work, earned rental income, or your income crossed the higher-rate tax threshold.

HMRC expects you to know when you need to file a return, but they don’t always make it obvious. They might have sent notification to an old address or assumed you knew based on your changed circumstances.

A personal tax account can help you stay informed about your tax obligations by providing essential updates regarding deadlines and penalties.

For many people, the first they hear about needing to file is when the penalty notice arrives. Talk about an unwelcome surprise! I once helped a client who only discovered they needed to file a self assessment tax return when a £300 penalty notice arrived 6 months after the deadline. Staying updated on wider policy shifts is just as important for avoiding surprises, particularly as the HMRC car tax reforms have recently faced significant delays following widespread industry feedback.

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Do I have a good reason to appeal the fine?

HMRC accepts appeals based on what they call “reasonable excuses.” A reasonable excuse is typically an unexpected situation beyond the taxpayer's control that prevents timely tax return submission.

And yes, not knowing you needed to file can sometimes qualify, particularly if you’ve never had to submit a return before.

First-time taxpayers often have stronger cases for appeal. If you’ve never had to file before, HMRC might be more understanding about your lack of awareness.

Changed circumstances like starting self-employment, receiving new types of income, or moving house can support your case. The key is being honest about why you didn’t know and providing clear evidence where possible.

How do I appeal against my late filing penalty notice?

You need to act quickly - appeals must be submitted within 30 days of receiving your penalty notice. Missing this deadline can make the appeal process significantly more difficult.

It is crucial to meet the self assessment filing deadline to avoid penalties. The challenges faced by taxpayers, such as long waiting times and difficulties in obtaining assistance from HMRC, can sometimes constitute a reasonable excuse for late filing penalties.

Communicating with HMRC promptly is essential to address any late submissions.

The simplest way is to use the appeal form that came with your penalty letter. Alternatively, you can appeal online through your Government Gateway account, which often results in faster processing.

Keep your explanation clear and truthful. Explain exactly why you weren’t aware of the filing requirement and include any supporting evidence that strengthens your case, keeping in mind that the new HMRC penalty points system makes timely compliance even more critical for every taxpayer.

Should I pay the fine while I'm appealing?

This is a tricky one. Paying the fine doesn’t affect your right to appeal, and HMRC will refund you if you win. It also demonstrates good faith while your case is being considered.

If you can afford it, paying stops further interest building up if your appeal is unsuccessful. This can save you money in the long run, even if it feels counterintuitive. Remember, penalties are in addition to the total tax owed, so addressing them promptly can mitigate additional financial strain.

But if paying would cause financial hardship, explain this to HMRC. They may offer a payment plan while your appeal is considered, allowing you to manage the potential cost more effectively.

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What should I do right now about my unfiled tax return?

Don’t wait! File your overdue tax return as soon as possible, even if you’re appealing the penalty. Delaying further only compounds the problem and increases potential charges.

The longer you leave it, the more penalties will stack up. HMRC increases the charges at 3, 6 and 12 months, meaning a small fine can quickly become a significant financial burden. It is especially important to file a partnership tax return on time to avoid penalties for all partners involved. If your submission or account access is flagged, understanding HMRC security checks and the time they take to resolve will help you manage your expectations during the verification process.

You can file online through your HMRC account. If you’ve never set one up, you’ll need to register first, which can take a week or so to process, so start this immediately.

Correcting Mistakes on Your Tax Return

Mistakes happen, and when it comes to your tax return, it’s crucial to correct them as soon as possible. Fortunately, HMRC allows you to amend your tax return for up to a year after the filing deadline.

You can do this easily through the HMRC online portal or via your software provider. If more than a year has passed, you’ll need to write to HMRC, explaining the circumstances and requesting a change.

For those who filed paper tax returns, the process involves downloading a new return, making the necessary corrections, and mailing it back to HMRC with ‘Amended’ written on each corrected page.

Correcting mistakes promptly is essential to avoid any potential penalties or interest on unpaid tax.

Plus, it gives you a chance to claim any tax relief or deductions you might have missed initially.

When correcting mistakes, make sure to:

Clearly explain the error and the correction.
Provide supporting documentation, if necessary.
Sign and date the amended return.
Keep a copy of the amended return for your records.

HMRC will review your amended return and update your tax liability accordingly. If you’re due a refund, it will be processed as soon as possible.

If you owe more tax, make sure to pay the outstanding amount by the assessment filing deadline to avoid late payment penalties.

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Submitting a Paper Tax Return

While filing your tax return online is the most efficient method, submitting a paper tax return is still an option if you prefer or if you’re unable to file online.

However, HMRC no longer sends paper tax returns to most people, so you’ll need to request one by telephone or download it from the HMRC website.

When submitting a paper tax return, make sure to:

Use the correct form for your tax year.
Fill in the form accurately and completely.
Sign and date the return.
Attach any supporting documentation, if necessary.
Mail the return to the correct address.

The deadline for submitting a paper tax return is usually 31 October following the end of the tax year. If you need more time, you may be able to get an extension by contacting HMRC.

It’s essential to keep a copy of your paper tax return and any supporting documentation for your records. If you’re unsure about any aspect of submitting a paper tax return, don’t hesitate to contact HMRC for guidance or seek help from a tax professional.

Remember, submitting a paper tax return may take longer to process than an online return, and you may be more likely to incur late filing penalties if you miss the deadline. So, plan ahead and ensure your tax affairs are in order well before the filing deadline.

How can I make sure this never happens again?

Set calendar reminders for key tax dates - especially the 31 January Self Assessment deadline. Setting reminders for your self assessment tax return is crucial to avoid late filing penalties.

Additionally, mark 31 July for payment on account if applicable to your situation.

Update your address with HMRC whenever you move. So many problems start when letters go to old addresses, leaving you unaware of important tax notifications.

Check if your circumstances mean you need to file a return at the start of each tax year in April. This proactive approach can prevent unpleasant surprises later on. If you are also involved in non-profit work, you should check the requirements for registering a constituted group or association to ensure those specific tax obligations are also tracked correctly.

Consider using a dedicated tax app to stay on top of your obligations. Pie is the UK’s first personal tax app designed specifically for working individuals dealing with tax burdens.

It offers integrated bookkeeping, shows your tax figures in real-time, and simplifies the entire tax return process.

Conclusion

Tax rules can be tricky even for the pros. That’s why understanding your Self Assessment obligations is essential if you want to avoid penalties and last-minute stress. When in doubt, it’s better to get help early than deal with fines later.

While HMRC does offer a Self Assessment helpline, the long wait times especially near deadlines can be frustrating. So come prepared with clear questions if you decide to call.

For a faster, smarter solution, Pie tax takes the hassle out of tax returns. It’s the UK’s first personal tax app built specifically for individuals, offering real-time tax figures, integrated bookkeeping, and expert advice when you need it most.

Even if you’ve been hit with a tax fine, don’t panic. Fix the issue, learn from it, and let tools like Pie.tax help you stay on track moving forward.