Despite the rumours that have been circulating, the deadline for submitting Self-Assessment tax returns has not been extended beyond 31 January 2021.Taxpayers should therefore be doing their utmost to comply, not least to save the time and possible expense involved in appealing penalties for late submission.
It appears to be a popular misconception that the deadline has been extended but that is not the case. Some professional bodies have lobbied HM Revenue & Customs (HMRC) for an extension, while others have merely asked HMRC to waive late filing penalties in relation to returns filed before 1 March 2021, at this already difficult time.
The penalty for missing the filing deadline by less than three months is £100, which may not seem a great deal, but is an added pressure when people are struggling as a result of the Coronavirus pandemic. In addition, once a return is over three months late, the penalties rise quickly, with the next stage being the imposition of daily penalties of £10 (up to a maximum of £900).
So far, HMRC have not agreed to waive late filing penalties but Jim Harra, HMRC’s Chief Executive and First Permanent Secretary has written to professional bodies confirming that:
- No-one will have to pay a penalty if they cannot file on time because of the impact of the pandemic.
- HMRC will accept Coronavirus pandemic-related personal or business disruption as a reasonable excuse.
- Coronavirus pandemic-related delay on the part of an agent will also be a valid reasonable excuse.
- HMRC are extending the penalty appeal period by three months.
This is positive news, but although Mr Harra has suggested that HMRC will be supportive, there are of course a number of reasons for taxpayers to ensure that their returns are submitted on time.
Not only do these include the possibility that HMRC will not consider that a particular delay was Coronavirus pandemic-related and therefore refuse to waive penalties, but there may also be circumstances where taxpayers cannot pay their full liability and need to ask for a Time To Pay (TTP) arrangement. This might be particularly pertinent for those whose July 2020 tax payments were postponed and become due this month in addition to the amounts that would now be due anyway.
There are different avenues for seeking a TTP arrangement depending on the size of the outstanding tax bill, but whichever method is appropriate, HMRC will be less likely to be sympathetic if the return was filed late without an obvious and valid reason for the delay.
Those that need to make a return should do so and pay what is owed if they can. HMRC should be sympathetic but not if they feel that people are using the Coronavirus pandemic as an excuse.