It has been quite common under Self Assessment for taxpayers struggling to complete a tax return before the deadline to overpay tax on the due date to avoid suffering the £100 late submission penalty. This practice took advantage of provisions the current law that say the penalty cannot exceed the amount that would have been payable on the filing date had a proper return been delivered.

New rules expected to come into effect in 2010 will stop this practice. There will be no provision for limitation of the initial £100 penalty by reference to tax payable. This will mean that if the 2009/10 Tax Return is late the fine will not be avoided by an overpayment. Our advice is of course to provide information to complete your return as soon as possible after the end of the tax year and avoid the last minute rush.