What If I Haven’t Filed a Tax Return for One or More Years?

If you are a UK taxpayer and you haven’t filed your self-assessment personal tax returns for one or more years, you’re not alone! You may find this surprising, but this situation actually impacts many people, particularly those that are self-employed.  Life can be busy, complicated, occasionally overwhelming, and tax deadlines can slip by unnoticed.

However, HMRC expects every individual who is required to file a return to do so by the appropriate deadline. Failing to meet these deadlines can result in penalties, interest, and a far more complicated financial situation, the longer the delay persists.

In this article, we explain the consequences of failing to submit your tax returns for one or more years, how interest and penalties are calculated, and what steps you can take to resolve the situation and bring your tax affairs up to date. We also explore why engaging with a qualified accountant can be an essential part of getting back on track!

Why You Must File

The self-assessment system is the process by which HMRC collects Income Tax from individuals who do not have tax automatically deducted from their income (as employees). This includes sole traders, landlords, company directors, and people with untaxed income from other sources.

You must file a self-assessment personal tax return if:

• You earned more than £1,000 from self-employment
• You received income from property or investments
• You had capital gains above the annual exempt amount
• You were a partner in a business partnership
• HMRC has specifically asked you to complete a return

If you meet any of these criteria and fail to file your tax return, you’re likely to face both penalties and interest!

 What Happens If You Don’t File a Tax Return?

When you fail to submit your tax return by the deadline (usually 31 January for online returns), HMRC will begin charging penalties automatically. These penalties escalate the longer the return remains unfiled.

They will also retrospectively charge interest on overdue tax once they find out or estimate what this is.  And this can occur many months after your return is filed, so it can come as a nasty surprise.

 Late Filing Penalties

Here is a breakdown of the penalties that apply:

1. One day late: £100 fixed penalty, even if you have no tax to pay or have already paid the tax owed.
2. Three months late: £10 per day penalty, up to a maximum of £900 (in addition to the initial £100).
3. Six months late: Additional penalty of either £300 or 5% of the tax due, whichever is higher.
4. Twelve months late: Another £300 or 5% of the tax due, whichever is higher. In serious cases, HMRC may charge up to 100% of the tax due as a penalty.

These penalties are cumulative and can result in a total penalty of over £1,600 even if no tax is owed.

 Interest on Overdue Tax

If you owe tax, HMRC will charge interest on unpaid amounts from the date the payment was due until it is paid in full.

The interest rate is set at 4% above the Bank of England base rate (prior to April 20205 this was 2.5%, but they have just significantly increased this!), which means that it can fluctuate.

As of 2025, the late payment interest rate stands at around 8.25% per annum, but you can check the latest rates on HMRC’s website HERE.

 Late Payment Penalties

In addition to interest, HMRC charges penalties for late payment:

• 30 days late: 5% of the unpaid tax
• 6 months late: An additional 5% of the unpaid tax
• 12 months late: Another 5% of the unpaid tax

These penalties apply on top of interest and late filing penalties, making it essential to act quickly!

 The Impact of Not Filing for Multiple Years

Failing to file for more than one year significantly increases the penalties and interest you owe. Additionally, you may:

• Be the subject of an HMRC enquiry or investigation
• Lose entitlement to certain benefits (e.g. Maternity Allowance)
• Damage your creditworthiness when applying for mortgages or loans
• Risk criminal prosecution in severe cases

The longer the delay, the more difficult it becomes to reconstruct records and provide accurate figures.

How to Resolve the Situation

Resolving years of overdue tax returns can seem overwhelming, but taking the following steps will put you on the path to compliance:

1. Determine What Periods Are Outstanding

Begin by identifying which tax years you have missed. Tax years run from the 6^th April each year to the 5^th April the following year.  A good start point is checking your Government Gateway personal tax account online if you have one.

Remember even if HMRC has not chased you, the obligation to file a tax return remains entirely your responsibility!

2. Gather Financial Records

Collect all the relevant financial documents for the missing years, including:

• Income records (invoices, bank statements, P60s/P45s, dividend vouchers)
• Business expenses and receipts
• Property income and allowable deductions 

3. Speak to an Accountant

This is arguably the most important step. A qualified accountant can:

• Check you are correctly registered and setup to file taxes
• Check if you need to submit a tax return for the tax years in question
• Help you reconstruct financial records
• Accurately prepare and file backdated returns on your behalf
• Minimise penalties (where this is possible) through good planning and advice
• Advise you before you speak to HMRC

And the sooner you do this the better, because the deadline for registering for Self-Assessment is 5 October following the end of each tax year.  That doesn’t mean that you can’t still file for earlier tax years (as discussed in this article), but you will be subject to penalties and interest on overdue tax for each year for which returns and payments are late. 

4. Submit the Missing Returns

You (or your accountant) can file missing returns via:

• Your HMRC online account
• Commercial accounting software
• Paper forms – This process is slower than online filing, but as you can only use the online process for the current and prior tax year, this may still be required if you have outstanding tax returns for multiple years!

Each year must be submitted separately, and HMRC may need to re-open your account if it’s been closed for inactivity. 

5. Pay What You Owe (or Arrange a Payment Plan)

If you can’t afford to pay everything at once, HMRC may allow you to set up a Time to Pay agreement, spreading the debt over several months or years. However, interest may still accrue, and timely communication with HMRC is crucial. 

6. Appeal Any Unfair Penalties

If there was a genuine reason why you couldn’t file (e.g., illness, bereavement, technical issues), you may be able to appeal against the penalties. Your accountant can also help to advise you how to present your case clearly and effectively.

In the majority of cases HMRC will not remove penalties entirely, but they may consider reducing these based on your circumstances. 

Voluntary Disclosure Through the Digital Disclosure Service

If you haven’t received a letter from HMRC but you know you still need to disclose unreported income for one or more earlier years, then you can use the Digital Disclosure Service (DDS). This is an opportunity to come forward voluntarily, which often leads to reduced penalties.

The process involves:

1. Notifying HMRC that you want to make a disclosure
2. Preparing and submitting the disclosure within 90 days
3. Paying the tax owed, plus interest and penalties

This is particularly helpful for individuals who have not filed for many years but wish to regularise their affairs proactively.

 Don’t Delay!

If you haven’t filed one or more years of self-assessment tax returns, it’s essential to act now. Delays only increase the financial and legal risks.

Being proactive can significantly reduce penalties and show HMRC you are serious about compliance. Whether you’ve missed one year or several, there is always a path forward—but taking the first step is up to you. Don’t let the situation spiral further; reach out to a reputable accountant and begin your journey back to tax compliance today.

Can QAccounting Help Me?

Yes, we aim to be the UK’s Premier online accounting service, and we are here to help you every step of the way, whether you need to understand the rules in greater detail or need advice about next best steps.

Please give us a call, email us, or contact us ONLINE to speak to a member of our Accounting team without delay!

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