Self-assessment late returns and late payment penalty relaxation

Feb 22, 2021

HMRC has announced that self-assessment (“SA”) taxpayers will not be charged the initial 5 percent late payment penalty if they pay their tax or make a Time to Pay (“TTP”) arrangement by 1‌‌ April 2021. The Institute also received a letter recently from the Financial Secretary to the Treasury responding to our letter to the Chancellor last month. In a meeting earlier this month, this Institute stressed to HMRC that the late announcement of the 2019/20 SA easement placed our members under extreme pressure and stress which could have been avoided if earlier submissions by Chartered Accountants Ireland and other representative bodies were heeded by HMRC.

By way of reminder, late 2019/20 SA online returns which should have been filed last month by 31 January 2021 can still avoid a late filing penalty if these are filed by this Sunday 28 February. Readers are reminded that this relaxation only applies to late filing penalties. If a return is filed after 31 January 2021 it is still classed as late for other purposes.

HMRC are also stressing that the payment deadline for SA remains 31 January 2021 and interest will be charged from 1 February 2021 on any amounts outstanding. The deadline has not changed, but this year, because of the impact of the pandemic, HMRC is giving taxpayers additional time to pay or set up a payment plan. Payment plans or payments in full must be in place by midnight on 1‌‌ April 2021 to avoid the first 5 per cent late payment penalty.

The self-serve TTP facility which was a recommendation of this Institute which the Chancellor announced in his September 2020 Winter Economy Plan allows taxpayers to spread the cost of their tax liabilities into monthly instalments until January‌‌ 2022. This can be done online, for amounts up to £30,000.