As added Covid-19 support, HMRC has announced that they will not charge late filing penalties for those who file their self-assessment tax return online by 28th February 2022, plus, late payment penalties will be waived for those who pay the tax due in full or set up a payment plan by 1st April 2022. However, interest will still be chargeable and there will be other implications if you do not submit and pay your self-assessment tax by 31st January.
What fees are being waived?
Normally a 5% late payment penalty is charged on any unpaid tax that is still outstanding on 3rd March, however, this year (like last year), Self-Assessment customers will not be charged the 5% late payment penalty if they pay their tax or set up a payment plan by midnight on 1st April 2022. You can also pay your tax bill or set up a monthly payment plan online at GOV.UK.
Whilst around 6.5 million people have already filed their tax return, HMRC is encouraging customers to file and pay on time if they can, to avoid being charged interest. However, if you are struggling with the 31st January payment deadline for Self-Assessment where interest is normally charged from 1st February on any amounts outstanding, HMRC is giving customers more time to pay or set up a payment plan.
More time allowed but charges are still applicable
Please be aware that the official filing deadline of 31st January will remain, and even though the filing date has been extended and the 5% late penalty trigger being delayed, any tax due by 31st January 2022 if not paid on time will incur interest from the due date until when the tax is paid.
The rate of interest will be HMRC’s official rate of interest which is 2.75%.
HMRC has stated that a return filed in February 2022 will be treated as filed late, however if there is a valid reasonable excuse the extension concession should apply. By filing the return late this extends the enquiry window, the usual enquiry window is 12 months from the due date for filing so by filing in February this will extend the enquiry window meaning HMRC have longer to enquire into the filed return.
For returns filed after 28th February the other late filing penalties (daily penalties from 3 months, 6 and 12 month penalties) will operate as usual.
A 5% 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 6 and 12 month points (August 2022 and February 2023 respectively) on tax outstanding where a payment plan has not been set up.
Other Self-Assessment tax returns
- HMRC will not charge late filing penalties for SA700s (Non-resident Company Income Tax Return) and SA970s (Tax Return for Trustees of Registered Pension Schemes) received in February – these returns can only be filed on paper.
- For SA800s (Partnership Tax Return) and SA900s (Trust and Estate Tax Return) HMRC will not charge a late filing penalty if customers file online by the end of February – the deadline for filing SA800s and SA900s on paper was 31st October.
Customers who file late on paper will be charged a late filing penalty in the normal way, however they can appeal against this penalty if they have a reasonable excuse for filing their paper return late.
Self-Employed National Insurance Contributions (NICs)
Self-employed customers who need to claim certain contributory benefits soon after 31st 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 to 2021 balancing payment that is due to be paid by 31 January 2022. Benefit entitlements may be affected if they:
- couldn’t pay their balancing payment by 31 January 2022, and
- have entered into a Time to Pay arrangement to pay off the balancing payment and other self assessment tax liabilities through instalments.
Summary
Basically, HMRC are granting an extension and waiving the late payment penalty, however it is a bit of a double-edged sword:
Yes you can file late, yes you can pay late without the 5% surcharge kicking in for a month, BUT:
- You MUST have a valid reasonable excuse for filing late should HMRC request
- You will STILL incur interest
- Although no penalty for late filing incurs, the return will still be treated as LATE – so a ‘black mark’ could still be applied against the taxpayer
- The enquiry window will be extended – so HMRC have longer to investigate the late returns than the statutory 12 months.
At LWA, we urge everyone to file on time and pay the tax by 31st January 2022 if they can, or arrange a Time to Pay.
Time to Pay arrangement (TTP)
If you’ve been affected by Covid-19 and need to utilise the support that HMRC are offering, you should contact HMRC as soon as possible on 0300 200 3822 for help and to set up a Time to Pay arrangement.
LWA are here to help!
If you need a hand with completing your tax return, take a look at our recent blog where we share tips on how you can meet the self-assessment deadline with minimal stress. Our friendly and supportive tax team can assist you with any final tweaks or help you meet that deadline accurately and efficiently! Please get in touch on 0161 905 1801 in Manchester or on 01925 830 830 in Warrington.