In a letter to the Chancellor of the Exchequer Rishi Sunak, Institute President Paul Henry has set out the necessity for HMRC to extend the 2019/20 self-assessment deadline given the recently announced further restrictions in all regions of the UK due to rampant change in the nature of the pandemic.
Our members survey last month indicated a preference for automatic suspension of late filing penalties. However, the announcement of enhanced restrictions last week means that businesses and their accountants now face extreme difficulties, and the Government must extend the 31 January 2021 deadline and lift late filing penalties to ensure tax obligations can be fulfilled safely.
Chartered Accountants Ireland has therefore called on the UK Government to introduce a short once-off, one month extension to the 31 January 2021 filing deadline to ensure businesses and their accountants are given sufficient time to prepare and file returns in adherence with public health requirements.
Although Chartered Accountants will make every effort to ensure that as many tax returns as possible are filed on time, due to the extraordinary circumstances of the pandemic, there will be instances where it is just not practically possible to make the deadline. A short extension to the filing deadline is essential for our members in business and practice who are doing all possible to meet their tax obligations in the most difficult of circumstances.
Since the Institute published its position paper the Next Financial Year last summer, the Institute has been lobbying HMRC for automatic suspension of late filing penalties for a period of three months in addition to enhanced Time to Pay (“TTP”) for 2019/20 self-assessment tax debt.
We have discussed this with HMRC at various forum meetings including meetings of the Representative Body Steering Group (the highest level forum meeting of stakeholders), the Virtual Communications Group monthly meetings and at bespoke meetings over the course of 2020.
Although our recommendation for enhanced TTP was endorsed by the Chancellor in the September Winter Economy Plan, HMRC has to date resisted any change to the forthcoming filing deadline.
HMRC’s most recent communication indicated that its position in respect of the forthcoming self-assessment deadline is unchanged. The full message from HMRC is as follows:-
“I am grateful for the evidence you have provided and the constructive engagement you have had with my policy teams. We have carefully considered your request. Many of you were on the Representative Bodies Steering Group call on 16 December, when Angela MacDonald discussed with you that we do not currently plan to waive late filing penalties.
Let me explain our reasons. Our SA message this year is a simple one:
- We want to encourage as many customers as possible to complete their returns by 31 January 2021, even if they can’t pay in full, because filing their return is key to crystallising their SA liability and being able to get our support, if they need it, to pay their tax.
- But no-one will have to pay a penalty if they cannot file on time because of the impact of the COVID-19 pandemic.
We do not want to complicate this message by sending a blanket signal that it’s OK to file late. That could have some serious disadvantages for our customers; de-coupling the payment and filing dates might confuse customers, and even lead to non-payment, interest accruing, and late payment penalties being triggered. It would also encourage some customers to file late who really don’t need to.
We know that some customers will not be able to file on time because of the impact of the pandemic on them or their tax agent. These customers should get their returns in as soon as they can. We will not penalise people who need more time. We will accept pandemic-related personal or business disruption as a reasonable excuse. If their return is late due to pandemic-related delay on the part of an agent, this will also be a valid reasonable excuse.
In the event that someone who has been unable to file on time receives a penalty notice, they or their agent will be able to get this cancelled easily by contacting HMRC. We are giving customers and agents more time by extending the penalty appeal period to 3 months.
I know you will be disappointed that our decision is not what you and many of your members wanted. I understand and sympathise with the extreme pressures your members have been under in this exceptional year: they have helped deliver the economic response to the pandemic, helping UK businesses get the support they need while at the same time suffering the effects of the pandemic on their own firms. I am very grateful to them for their valuable and vital work.
At present, filing rates are holding up well, but we will continue to monitor the situation during January and keep matters under review.”
Taxpayers must complete a self-assessment return if they:
- earned more than £2,500 from renting out property;
- received, or their partner has received, Child Benefit and either of them had an annual income of more than £50,000;
- received more than £2,500 in other untaxed income, for example from tips or commission;
- are a self-employed sole trader whose annual turnover is over £1,000;
- are an employee claiming expenses in excess of £2,500;
- have an annual income of over £100,000; or
- have earned income from abroad that they need to pay tax on.
Once self-assessment taxpayers have completed their 2019/20 tax return, and know how much tax is owed, they can set up their own payment plan to help spread the cost of their tax liabilities, up to the value of £30,000 using the online self-serve Time to Pay facility to set up monthly direct debits. For amount over £30,000, Time to Pay may also be available by contacting HMRC. Interest will be applied to any outstanding balance from 1 February 2021.
Taxpayers can also now check on GOV.UK whether they need to declare, or possibly pay tax, on any ‘casual’ income. This new interactive guidance explains what individuals need to do if they receive non-PAYE income from:
- selling things, for example at car boot sales or auctions, or online;
- doing casual jobs such as gardening, food delivery or babysitting;
- charging other people for using your equipment or tools; or
- renting out property or part of their home, including for holidays (for example, through an agency or online).
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