HMRC suspends late filing penalties

In an 11th hour U-turn by government, HM Revenue and Customs’ (HMRC) Chief Executive Jim Harra has announced that Self Assessment customers who cannot file their tax return by the 31 January 2021 deadline will not receive a late filing penalty if they file online by 28 February.

“We want to encourage as many people as possible to file their return on time, so we can calculate their tax bill and help them if they can’t pay it straight away,” Mr Harra says.

“But we recognise the immense pressure that many people are facing in these unprecedented times and it has become increasingly clear that some people will not be able to file their return by 31 January.

“Not charging late filing penalties for late online tax returns submitted in February will give them the breathing space they need to complete and file their returns, without worrying about receiving a penalty.

“We can reasonably assume most of these people will have a valid reason for filing late, caused by the pandemic.”

Normally, late filing penalties are applied to all returns filed after the 31 January deadline. Those penalties are cancelled if you have a reasonable excuse for filing late. However, this year HMRC is not issuing late filing penalties for a month to help taxpayers who are unable to meet the deadline. Late filing penalties will not be issued for online tax returns received by 28 February.

HMRC has previously said that it was keeping the situation closely under review. It has become increasingly clear from the filing rate that some taxpayers cannot file on time, and the department has now determined that ensuring no customers will receive late filing penalties if they file online before the end of February is the best way to help them.

Important to note

While the news is a welcome reprieve for many taxpayers, it is important to note that the 31 January deadline is still key for all other purposes, including submitting your tax payment, where interest at 2.6% and a 5% surcharge for payments not paid by 2 March still apply.

Adding to this, while the £100 late filing penalty won’t apply this year, a tax return filed after 31 January is deemed to be ‘late’ for all other purposes, leaving HMRC with an automatic extension on the window to raise an enquiry. There are also wider implications of filing after 31 January which need be considered in relation to your tax affairs.

Self-employed individuals also need to ensure they don’t find themselves excluded from future Government support, such as the fourth Self-Employment Income Support Scheme grant. While details and criteria are yet to be announced, HMRC may require the submission of the 2019/20 tax return information to confirm eligibility.

It is therefore recommended that you authorise a tax specialist such as Beavis Morgan to handle your tax affairs and deal with HMRC on your behalf. This will ensure that all deadlines are met and that you are not paying more tax than you need to.

At Beavis Morgan, our diverse team of tax professionals are committed to ensuring that your tax reporting obligations are fully satisfied and that every opportunity to maximise tax savings is made known to you, and by restructuring your affairs in a tax effective and efficient way.

If you have any concerns relating to your tax return or wish to discuss your tax affairs in further detail, please email or contact your usual Beavis Morgan Partner.