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A primary concern for practitioners in the run-up to the 31 January filing deadline is avoiding the £100 late filing penalty for their clients for failing to file their returns by 31 January (with a further £100 fixed penalty applying if the tax return is still outstanding at 31 July).

The 'capping' of penalties under TMA 1970, s93(7) used to provide practitioners with a small crumb of comfort, since it restricted the amount of penalty for late submission of a Self Assessment return to the amount of tax outstanding at 31 January following the end of the tax year.

Therefore, in instances where clients were particularly tardy in providing their information in time for 31 January, the following practices became common:

• Repayment cases – To file the return after 31 January.  No penalty is due as there is no tax.
• Cases where tax is due – To file the return after 31 January and make a protective payment to fully cover the expected liability.

From 2009/10 onwards, the capping of the fixed penalties to the level of tax outstanding at 31 January will disappear. Therefore, the £100 fixed penalties which become due for tax returns filed online after 31 January following the end of the tax year, or for paper returns filed after 31 October (and again for returns filed after 31 July) will now be automatic, irrespective of the amount of tax outstanding at 31 January; even of this is zero or there is a repayment due.

The new provisions are introduced by Finance Act 2009 s106 and Schedule 55.

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