HMRC extends Self-Assessment deadline penalty-free due to COVID impact

HM Revenue and Customs has waived penalties for late payment and late filings by Self-Assessment taxpayers until 2^nd April 2022.

The Self Assessment timeline is now as follows:

• 31 January – usual Self Assessment deadline (filing and payment)
• 1 February – interest accrues on any outstanding tax bills
• 28 February – last date to file any late online tax returns to avoid a late filing penalty
• 1 April – last date to pay any outstanding tax or make a Time to Pay arrangement, to avoid a late payment penalty
• 1 April – last date to set up a self-serve Time to Pay arrangement online

With restrictions and coronavirus cases weighing heavy on the resources of taxpayers, agents and even HMRC itself, thankfully they have responded to calls from across the field to repeat last year’s penalty waivers. We welcome this decision, as two years into the COVID-19 pandemic, businesses and their agents are still increasingly hard-pressed to meet the 31^st January deadline and the extra time will really help those who need it.

It is important to note, though, that the waiver of late-filing penalties has not removed the need altogether to pay any liabilities due by the end of the month. The 31^st January deadline remains unchanged and, in the event that payment is not received by 1^st February, 2.75% of interest will apply from that date onwards. The deadline for filing 2020/21 tax returns also remains 28^th February 2022.

What has changed is the 5% late-payment penalty, originally effective from 1^st February, will now not apply until 2^nd April 2022. Up until this date, the blanket assumption will be made that taxpayers have reasonable grounds for late filing – thus removing the need for any formal appeals process. For those with cashflow issues, the treasury has also enhanced their Time to Pay options – giving taxpayers the chance to spread liabilities of up to £30,000, across, up to 12, monthly online payments. This is only available, though, to those who file by 28^th February. More information on how to set up a Time to Pay arrangement can be accessed here.

Furthermore, there are a number of unique cases worth mentioning – namely paper returns, SA700s, SA800s, SA900s and SA970s.

The automatic waiver does not apply to paper returns that were due for filing on 31st October 2021. In this instance, taxpayers may have grounds to appeal their penalty – arguing that the very same coronavirus impact constitutes a reasonable excuse for late filing. A formal appeal will be necessary here.

What’s more, late SA700s and SA970s will not be penalised if received on paper in the month of February. For SA800s and SA900s, taxpayers will not incur a late filing penalty provided they have filed online by the end of February. As the deadline for paper filing in these instances was 31^st October, late paper filing of SA800s and SA900s will be penalised as per usual.

Wherever possible, HMRC are encouraging that taxpayers file and pay on time as normal. But, in the event that coronavirus restrictions have obstructed this process, the penalty waiver is intended to ‘give taxpayers more time to pay or set up a Time to Pay plan’.