Taxpayers should pay what they owe to HM Revenue & Customs today (31 January) and file their tax return, if possible, despite the deadline being extended until the end of February advises Robert Salter.
The sting in the tail
The extended deadline ensures that taxpayers avoid needless penalties and gives them extra time needed to gather missing data, which may have been difficult to gather during the pandemic.
However, the sting in the tail is that the today’s deadline of 31 January is still important, and payments should still be made.
Taxpayers will be left with a surprise in relation to interest and surcharges for late payment of tax if they wrongly believe the extension also applies to paying their tax. HM Revenue & Customs’ (HMRC’s) requirement today and any late paid amounts will attract daily interest at 2.75% annualized rate, and a 5% surcharge if not paid by 2 March.
In addition, even though tax returns filed by 28 February will not be late for basic late payment penalties, in other ways, the tax return will still be ‘late’, which can mean, for example, that the deadline for HMRC to raise an enquiry into the tax return is automatically extended.
Taxpayers should file their returns as soon as possible
I would recommend that taxpayers file their returns today 31 January, if they have all the information required. Even where it is not possible to file the tax return by this date, there may be some benefit for those taxpayers who are expecting a significant tax liability on their tax returns e.g., because of capital gains or other income which isn’t subject to any withholding taxes, to make an estimated payment today to minimise any interest charges which might otherwise be due.
Would you like to know more?
If you would like to discuss the above or how it may affect you and your business, please get in touch with your usual Blick Rothenberg contact or Robert Salter using the details on this page.
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