Tax self-assessment deadline day: Use the rules to avoid £100 fine

If they put their hand up today, HMRC rules permit them to have a three-month window to file their return – and escape the £100 penalty.

They could, however, face other penalties unless they pay the money they owe to the taxman today.

You can do this with your National Insurance number by calling 0300 200 3300.

If it just child benefit that is owed, then use the taxman's calculator https://www.gov.uk/child-benefit-tax-calculator

If you have two children, the amount is £438.

If you register today but don't pay the money until you complete the form – after tonight's deadline – then a penalty kicks in from your failure to register by October 5. This can be up to 100pc of the amount you owe, although it is applied with discretion by the taxman.

Action: Register today; Pay money owed today; file form online in next three months.

End result: Should escape the fine and penalty.

I have told the taxman I need to file but don't have an online log-in

As mentioned above, you are supposed to tell the taxman by October 5 if you owe tax – or child benefit payments – and that you need to enter the self-assessment system to pay. Once you do this, it triggers the taxman to send you a Unique Taxpayer Reference (UTR). This can take up to six weeks.

After that, you need an online log-in. This can take another 10 days as a password needs to be sent in the post. If you haven't applied by now, it's obviously too late. But again, the rules offer hope.

The taxman has been telling those who apply in the past 10 days – because they don't have a log-in or have lost the password – that they will have some breathing space.

This was reported on Tolley, a specialist tax website. The email said:

"If you enrol for the Self Assessment online service or request a replacement User ID or password between midnight 21 and midnight 31 January GMT, you must file your tax return online before midnight 15 February to avoid receiving a penalty. You must still pay any tax due by midnight 31 January."

This was hailed by some as an extension. Chas Roy-Chowdhury, head of taxation at the Association of Chartered Certified Accountants, told The Guardian: "A full two-week extension – that's never happened before. I think it's pragmatic and realistic, and they ought to be commended for it."

HMRC told The Telegraph it was not a new extension and had always been in the rules. Either way, if you apply for this online code before midnight, you then have a few weeks to file your return.

Crucially, however, you must pay the money you owe today – see detail in the scenario above.

Action: Request online log-in or lost password before midnight; Pay money owed today; Complete form within two weeks.

End result: Escape £100 fine.

Leniency from HMRC?

A quick glance of the reader comments on The Telegraph self-assessment stories this week will tell you that HMRC and leniency should not be used in the same sentence.

We would dare to suggest this year it may be different, especially given the political sensitivities surrounding the withdrawal of child benefit from middle class families.

When asked about the 100,000 parents who are yet to register, HMRC told The Telegraph that depending on circumstances, some “may not pay a penny” and that all cases would be dealt with on a case-by-case basis.

It has repeatedly told The Telegraph that it does not want to fine people or apply penalties. Your best bet is play the system as far as the rules will permit, as we have explained above.

We would like to hear your experiences: email money@telegraph.co.uk

How fines and interest can build up

For those already registered for self–assessment, a £100 fine is applied for late filing on February 1. Then at the start of May, £10 is added each day until £900 is reached. There are further fines of at least £300 at six months and 12 months. After 30 days, 5pc is added on to what you owe, followed by another 5pc after six months, and again at 12 months. Interest is also applied, at a rate of 3.5pc on the amount owed, and on the penalties.

Calculations undertaken for the Telegraph by accountants Baker Tilly show that someone owing the typical £438 on child benefit who fails to file a form would face a bill of £1,030.66 after six months. "These are the automatic charges, and do not include any other penalties which may be applied," the company said.

For those not registered but who should be, there is also a "fail to notify" penalty, which could be 100pc of what is owed. HMRC applies this "subjectively". They could be hit with the other charges once they are registered.

* Changes to child benefit and who owes money

Around 1.1 million parents lost entitlement to child benefit a year ago but around 630,000 continued to receive the payments and need to repay the money via self-assessment. An estimated 100,000 owing child benefit have done nothing.

It was withdrawn from any household with an earner on more than £60,000. Those earning between £50,000 and £60,000 see it gradually withdrawn.

Parents with three children would have lost £2,449 a year. To replace that income, a pay rise of more than £4,000 would be needed, after higher – rate tax. For families with two children, the benefit is worth around £1,700, with the Government paying £20.30 a week for the first child and £13.40 for siblings.

- Got a tax question? Put it to our experts moneyexpert@telegraph.co.uk

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