HMRC defers late self assessment fines to end February
HMRC has waived late filing and late payment penalties for self assessment taxpayers by one month, effectively delaying the tax return deadline to 28 February
The tax authority has announced that it will not give out financial penalties for late filing and late payments for self assessment tax returns which will give more time for taxpayers to complete and submit 2020-21 tax return online and pay any tax due.
The deadline to file and pay remains 31 January 2022 however the extension of the deadline means that anyone who cannot file their return by the end of January will not receive a late filing penalty if they file online by 28 February.
The waiver also means that anyone who cannot pay their self assessment tax by the January deadline will not receive a late payment penalty if they pay their tax in full, or set up a time to pay arrangement, by 1 April. HMRC states that interest will still be payable from 1 February as usual.
Figures show that 12.2m taxpayers still need to submit their tax return by 31 January 2022 with 6.5m already having done so.
HMRC states that it recognises the pressure faced by taxpayers and their agents this year with the Covid-19 Omicron variant and has halted the penalties to help ease the worry of receiving a fine however, HMRC continues to encourage taxpayers who can submit and pay on time to do so.
Angela MacDonald, HMRC’s deputy chief executive, said: ‘We know the pressures individuals and businesses are again facing this year, due to the impacts of Covid-19. Our decision to waive penalties for one month for self assessment taxpayers will give them extra time to meet their obligations without worrying about receiving a penalty.’
The decision has been welcomed by accountancy bodies who had recently called on HMRC to remove the penalties and push back the January deadline like they did last year.
Adam Harper, director of professional standards and policy, AAT, said: ‘Today’s decision will give valuable breathing room to many taxpayers and help them to avoid potentially damaging fines at a critical time – not only for them as individuals, but for the UK economy as a whole.’
The Association of Accounting Technicians (AAT) has also stated that Covid-related staff shortages were making it ‘impossible for firms to process the documents on behalf of their clients in time’ and called on HMRC to extend the January deadline. The AAT added that that this measure will ‘help reduce the stress due to Covid-19-related absences’.
The freelancer trade body IPSE agreed with the AAT on accountancy absences stating that thousands of freelancers could be ‘unfairly punished’ for accountancy staff being ill with Omicron, particularly as the self employed sector is ‘still in a fragile state’ and more support is needed.
Andrew Chamberlain, director of policy, IPSE said: ‘We welcome today’s measure, however, it doesn’t help solve the long-term issues, confusion around IR35, the pandemic, inflation, etc, that continue to damage the financial wellbeing of freelancers.’
Commenting on the decision, Nimesh Shah, CEO at Blick Rothenberg said: ‘HMRC may be more concerned by the number of returns which remain unfiled, and the pressure to extend the timeframe as the deadline became closer.
‘HMRC are also likely to be very nervous about dealing with subsequent appeals against late filing penalties citing coronavirus, and therefore decided to take a pre-emptive decision now.
‘Given the public and government sentiment towards coronavirus, such appeals were expected to be waived through and HMRC have simply decided to extend the deadline by a month than go through the motions with appeals later. It suits HMRC not to have to the spend the time and cost in managing the appeals process later.’
The Chartered Institute of Taxation (CIOT) believes that HMRC should not just stop there and be open to introducing more support.
John Cullinane, director of public policy, CIOT said: ‘We would like the situation to remain under constant review. For example, it may be appropriate to introduce further easements similar to last year, such as extending the time limits for appealing any penalties which are levied and allowing tax advisers to make ‘bulk’ appeals on behalf of their clients.’