Last Thursday HMRC informed Chartered Accountants Ireland that late filing and late payment penalties will be waived for one month for self-assessment taxpayers filing their 2020/21 returns online after the normal filing deadline of 31 January 2022. A Press Release was also issued with more details. The Institute made representations to HMRC before Christmas and last week highlighting the health and safety risks facing accountants, businesses, and taxpayers in meeting the 31 January deadline in wake of worsening COVID-19 case numbers. The Institute first made representations to HMRC in respect of the 2020/21 filing deadline at a meeting of the Representative Body Steering Group in October 2021.
The deadline to file and pay remains 31 January 2022 however those who cannot file their return by the deadline will not receive the 5 percent late filing penalty if they file online by 28 February 2022. This will not be charged if they either pay their tax in full, or set up a time to pay arrangement, by 1 April 2022.
On publishing news of the penalty waivers, Lucy Frazer, Financial Secretary to the Treasury, said: “We recognise that Omicron is putting people under pressure, so we are giving millions of people more breathing space to manage their tax affairs. Waiving late filing and payment penalties will help ease financial burdens and protect livelihoods as we navigate the months ahead.”
HMRC noted that, of the 12.2 million taxpayers due to submit their tax return by 31 January 2022, almost 6.5 million have already done so.
Time to pay options remain available to assist taxpayers. Once a taxpayer has filed their 2020/21 tax return, they can set up an online payment plan to spread self-assessment bills of up to £30,000 over 12 monthly instalments which was a recommendation of Chartered Accountants Ireland in its 2020 position paper The Next Financial Year.
HMRC noted that if taxpayers still cannot file by 28 February 2022 or pay (or set up a payment plan) by 1 April 2022, the usual right of appeal against any penalty will be available, with COVID-19 as a possible reasonable excuse.
In a further email from HMRC it is confirmed that there is no change to the filing or payment deadline for 2020/21 and other obligations are not affected. This means that:-
- For any 2020/21 tax unpaid by 31 January 2022, interest will be charged on late payment as normal from 1 February 2022. The late payment interest rate from 4 January 2022 is 2.75%. Repayment interest rates are unchanged;
- A return received online in February will be treated as a return received late where there is a valid reasonable excuse for the lateness;
- This means that there will be an extended enquiry window. The normal enquiry window is 12 months from date of receipt of return but where the return is filed late that is extended to the next quarter end date which in this case is 30 April 2022 so filing in February 2022 will mean the enquiry window is 30 April 2023 for all returns filed after 31 January 2022 but by 28 February 2022;
- For returns filed after 28 February the other late filing penalties (daily penalties from 3 months, 6- and 12-month penalties) will operate as usual;
- A 5 percent late payment penalty will be charged if tax remains outstanding, and a payment plan has not been set up, by midnight on 1 April 2022. Further late payment penalties will be charged at the usual six- and 12-month points (August 2022 and February 2023 respectively) on tax outstanding where a payment plan has not been set up;
- HMRC will not charge late filing penalties for SA700s and SA970s received by 28 February 2022 (these returns can only be filed on paper);
- For SA800s and SA900s, HMRC will not charge a late filing penalty if taxpayers file online by the end of February 2022. The deadline for filing 2020/21 SA800s and SA900s on paper was 31 October 2021. Taxpayers who file late on paper will be charged a late filing penalty in the normal way. They can appeal against this penalty if they have a reasonable excuse for filing their paper return late;
- Self-employed taxpayers who need to claim certain contributory benefits soon after 31 January 2022, need to ensure their annual Class 2 National Insurance Contributions (NICs) are paid on time. This is to make sure their claims are unaffected. Class 2 NICs are included in the 2020/21 balancing payment that is due to be paid by 31 January 2022; and
- Benefit entitlements may be affected if a taxpayer couldn’t pay their balancing payment by 31 January 2022, and they have entered into a time to pay arrangement to pay off the balancing payment and other self-assessment tax liabilities through instalments.
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