Last month on 25 January, HMRC announced that late filing penalties will not apply to 2019/20 income tax returns filed by 28 February. Earlier that month the Institute’s President, Paul Henry, wrote to the Chancellor of the Exchequer calling for a concession on the income tax deadline in light of the rampant nature of COVID-19 and the lockdown announced in early January. Chartered Accountants Ireland also made representations to Minister Diane Dodds and Minister Conor Murphy.

In a survey of NI members, over 85 percent of respondents said an automatic suspension of late filing penalties or a deadline extension was necessary given the extraordinary pressures facing businesses and accountants. The announcement by HMRC is practical and helpful to all concerned – taxpayers, accountants and HMRC.

HMRC’s press release is available on GOV.UK. Jim Harra, Chief Executive of HMRC, also wrote to Chartered Accountants Ireland and other professional bodies on the announcement noting that “this easement applies only to the initial £100 late filing penalty. We are not moving the filing deadline and other self-assessment obligations are unchanged, including the obligation to pay on time. I would value your support in getting the message out that taxpayers should file and pay on time where possible.”

Over 50 percent of Chartered Accountants surveyed in January said that their firm was incredibly busy and that the workload was unmanageable. In addition to the challenges of working and living under pandemic lockdown conditions, accountants also have increased workloads helping businesses with Government COVID-19 supports.

Nearly all respondents (99 percent) to the survey have clients claiming supports administered by HMRC and over 80 percent said that their clients need a high degree of assistance in claiming these supports. Communicating with HMRC is also a problem with 96 percent of those surveyed saying it was more difficult to make contact with HMRC than this time last year.

Chartered Accountants Ireland had previously 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 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 may be instances where it is just not practically possible to make the deadline. A short extension to the filing deadline was 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 an easement in respect of the 2019/20 filing deadline in addition to enhanced Time to Pay (“TTP”) for 2019/20 self-assessment tax debt.

This was discussed 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 the Institute’s recommendation for enhanced TTP was announced by the Chancellor in the September Winter Economy Plan, HMRC had, until 25 January, resisted any easement to the 2019/20 filing deadline.

Readers are reminded that this easement is for late filing penalties only. It does not affect any other tax obligations. A return received in February 2021 will be treated in the same way as a return filed in February in a ‘normal’ year where there is a reasonable excuse – the penalty will not be charged but the return is treated as late for the purposes of enquiry windows etc.

The easement for late filing penalties also applies to SA700 and SA970 returns filed in February 2021 (which can only be filed on paper).

For SA800 and SA900 returns, HMRC will apply the easement if taxpayers file online by the end of February 2021. Their paper deadline was 31‌‌ ‌October 2020, so if taxpayers file on paper in February 2021, the easement will not apply. HMRC has confirmed that the easement is still available to anyone filing on paper in February 2021 who could not file online due to one of the online filing exclusions.

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 amounts 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 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).