What Happens If You Miss a Tax Deadline? A Calm Guide

One of the biggest sources of anxiety for new business owners is tax deadlines. The thought of missing a key date and facing penalties from HM Revenue & Customs (HMRC) can be very stressful. It is a common fear, but the good news is that understanding what happens can make the situation feel much more manageable.

This guide is written to calmly explain the consequences of missing a tax deadline in the UK. It covers the different types of penalties, what to do if you think you will be late, and how to handle the situation without panic. Whether you are a sole trader in Farnborough or a limited company director, the principles of dealing with HMRC are the same.

Late Filing vs. Late Payment

It is important to understand that there are two different types of penalties, because there are two different responsibilities:

1. Filing: This is the act of sending your completed tax return to HMRC.
2. Paying: This is the act of paying the tax you owe.

You can receive a penalty for filing late, even if you have paid your tax on time. Equally, you can receive a penalty for paying late, even if you have filed your return on time. It is possible to get penalties for both.

What Are the Penalties for Late Filing?

For a Self-Assessment tax return, the penalties for filing late build up over time. The structure is designed to encourage you to file as soon as possible.

• An initial £100 penalty is issued if your return is even one day late.
• After 3 months, HMRC can charge an additional daily penalty of £10 per day, up to a maximum of £900.
• After 6 months, there is a further penalty of 5% of the tax you owe or £300, whichever is greater.
• After 12 months, there is another 5% or £300 penalty, whichever is greater.

As you can see, the costs can quickly add up, which is why it is so important to file on time if you can.

What Are the Penalties for Late Payment?

If you do not pay what you owe by the tax deadline, you will be charged interest on the outstanding amount. On top of the interest, HMRC will also issue late payment penalties.

These are charged as a percentage of the unpaid tax:

• At 30 days: 5% of the tax you owe.
• At 6 months: Another 5% of the tax you owe.
• At 12 months: A further 5% of the tax you owe.

These penalties are in addition to the penalties for late filing.

What to Do If You Know You Are Going to Be Late

Ignoring the problem is the worst thing you can do. If you know you are going to struggle to file or pay on time, the best first step is to contact HMRC as soon as possible. They are often more understanding if you are proactive.

If you cannot afford to pay your tax bill, you may be able to set up a Time to Pay arrangement (AKA Payment Plan), which allows you to spread the cost over a period of time. However, you must contact HMRC to arrange this; you cannot simply decide to pay in instalments yourself.

The contact numbers to call HMRC regarding setting up payment plans are the following:

HMRC Phone Line Operating hours are:

Monday to Friday – 8am to 6pm

Saturdays – 8am – 4pm

Sundays and Bank Holidays – Closed 

Self Assessment Tax Payment Helpline – 0300 200 3822

Under 60 days past deadline: You can often set up a plan online. If you need to call, use 0300 200 3820 

Over 60 days past deadline: You must call 0300 123 1813 to set up a plan over the phone. 

PAYE – To set up a payment plan for Employer’s PAYE, you should call 0300 200 3819 if you have missed your payment deadline. This number is available

If you are attempting to set up a plan online but cannot, or if you need to discuss a plan for debts above £30,000, you can contact the Business Payment Support Service at 0300 200 3835 for tax related payments for PAYE, VAT and Corp Tax.

Key Tips:

• Have your/Company UTR (Unique Taxpayer Reference) or NI number ready
• (For PAYE) – PAYE Reference and PAYE Accounts Office Reference)
• Business Registered Office Address (for VAT – Principle Place of Business Address)
• Be prepared to explain your financial situation and propose a realistic affordable monthly payment.
• Contact HMRC before the payment deadline if possible, as this increases the likelihood of an agreement. 

Appealing a Penalty: The ‘Reasonable Excuse’

It is possible to appeal against a penalty if you have a ‘reasonable excuse’ for why you were unable to file or pay on time. A reasonable excuse is something unexpected or outside your control that stopped you from meeting your tax obligation.

Examples of what might count as a reasonable excuse include:

• The recent death of a close relative.
• An unexpected stay in the hospital.
• Serious or life-threatening illness.
• Computer or software failure just before the deadline.
• Service issues with the HMRC online portal.

Forgetting the deadline, not having enough money, or relying on someone else to do it for you are generally not considered reasonable excuses. If you do appeal, you must explain what happened and send your return (or pay your tax) as soon as you can.

When Getting Advice Can Help

Dealing with penalties and communicating with HMRC can be stressful. You are not required to use an accountant, but getting professional advice can be very helpful if you have missed a deadline, you are unsure how to appeal, or you want to discuss a Time to Pay arrangement.

If you would like calm, practical support as your business develops, Penney’s Accountancy works with UK small businesses in Farnborough and the surrounding areas, helping owners understand their responsibilities and communicate with HMRC confidently.

Want to Learn More in Your Own Time?

For those who want to build their confidence and understand these topics in more detail, Penney’s Finance School offers an online, self-paced business and finance course. It covers everything from company setup to cash flow and tax, allowing you to learn at your own pace.

Important information

The information provided in this article is intended as general guidance for UK businesses only and reflects UK tax legislation and HMRC guidance as of February 2026.

Tax rules and business requirements can change, and individual circumstances vary. Before acting on any of the information above, we recommend speaking to a qualified accountant who can provide advice tailored to your specific situation.