HMRC waives Tax Return penalties until 28th February

Coronavirus, Personal Tax,

Just after Christmas, HMRC announced that, despite calls from Accounting firms and industry bodies there would be no change to the filing deadline for Self Assessment Tax Returns.

Today they confirmed that there would be no penalties imposed if a Self Assessment Tax return is filed by the 28th February, effectively extending the absolute deadline by a month.

What difference does this make?

In our view, not a lot!

Any tax due MUST be paid by the 31st January as usual, and interest will be charged from 1st February.

The only way you can know how much to pay, is to have prepared your Return!

You could do a rough calculation, but to get it close enough, you pretty much do the Return. Far better to get it done and submitted accurately, and then you know exactly how much to pay and don’t have to over-egg the payment and then recover any refund from HMRC. If you don’t overpay, you’ll end up paying interest, so it’s a lose:lose really.

And if you want to pay any liability in instalments, you have to have submitted your Return to HMRC already, who also need to have processed it before you can apply for a payment arrangement. (Check the latest warning about issues with time to pay applications here.)

Why the U-turn?

Jim Harra, HMRC Chief Executive, has said the following: ‘We want to encourage as many people as possible to file their return on time, so we can calculate their tax bill and help them if they cannot pay it straight away. But we recognise the immense pressure that many people are facing in these unprecedented times and it has become increasingly clear that some people will not be able to file their return by 31st January.’

‘Not charging late filing penalties for late online tax returns submitted in February will give them the breathing space they need to complete and file their returns, without worrying about receiving a penalty. We can reasonably assume most of these people will have a valid reason for filing late, caused by the pandemic.’

The good news…

What this announcement does do, is reduce the pointless workload that many people were dreading after the earlier announcement.

HMRC said that the deadline would remain as 31st January, but that they would be lenient and cancel penalties where the pandemic had delayed the submission of a return.

Given that this is highly likely to be the primary cause of delays, going through the process of issuing penalties to everyone who hadn’t submitted as of the 31st January, only to then have them all appeal, and for the penalty to be removed, seemed to be a huge waste of everyone’s time.

With today’s announcement, the issuing of penalties is delayed, and taxpayers, HMRC and many, many accounting firms will be saved from a pointless back-and-forth paperwork exercise!

Have you submitted yet?

If you prepare your own return, today’s announcement gives you some extra breathing space. Do take advantage of it if you need to but remember that you still need to pay any liability by the 31st January!

If we prepare and submit your Return for you, you can ignore all of this, as you’re done for this year! All of our personal tax returns have already been submitted for 5th April 2020, so an enormous thank you to all of those clients who helped us hit the deadline. We know it wasn’t easy getting everything together with all that’s been going on, but we can now ALL move on and look forwards again…

How to pay your tax bill.

Unsure how to make your payment? Download our ‘How to Pay‘ sheet.

You’ll also need your UTR reference, which can be found on the top of your Self Assessment Tax Return or any correspondence from HMRC. It’s a 10-digit number.

Confused or concerned about your Tax Return? Why not get in touch? We’ll happily talk you through the process, and if you’d like someone else to take care of it for you in future, we can do that too!