Every practice has its fair share of clients who arrive in that last week of January to have their tax return completed and for many reasons it's inevitable that some of those returns will not be submitted on time. But do these clients know about the new late filing regime?

Last January 1.4 million taxpayers failed to meet the 31 January deadline with 1.1 million still not having filed six months later. Under the old penalty regime this involved a £100 initial fine for late filing, but this was also capped at the amount of tax owed. So, if a taxpayer owed nothing, the penalty was cancelled.

If that pattern is repeated this year, the financial hand of the new more punitive regime will be felt by those filing late. Whilst the new regime is harsher it has to be said that it does fall short of the Republic of Ireland regime which imposes tough 5 and 10% surcharges on late filers with a maximum potential penalty of €63,485!

Let's take a look at the new regime.

The new penalty system has four elements, which mount up cumulatively if the tax return isn't filed by the deadline:

• an immediate £100 fine at 1 February; plus
• £10 a day fine from 1 May for 90 days – a maximum of £900; plus
• £300 fine on 1 August (or 5% of the tax due if that is more); plus
• £300 fine on 1 February the following year (or 5% of the tax due if that is more).

In serious cases, the penalty after 12 months can be up to 100% of the tax due. These fines are also no longer capped at the tax owed, so taxpayers could face fines of up to £1,600 – even if they owe nothing or if HMRC owes them a refund (note that the filing date for returns sent in on paper was 31 October, so the dates at which fines apply are also three months earlier than those for online filers.) New penalties also apply for tax paid late and these are 5% of the tax unpaid at 30 days, 6 months and 12 months.

More information is available from HMRC here.http://www.hmrc.gov.uk/sa/deadlines-penalties.htm