Tax office moves the penalty spot

During the last week of January, HMRC finally accepted that many tax-payers would not make the filing deadline – 31 January 2021 – for their 2019-20 self-assessment tax return; due, in the main, to continuing COVID disruption.

As a gesture, they have confirmed that:

Self-Assessment tax-payers 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.

Whilst this a welcome recognition of the difficulties many tax-payers face as they struggle with lock-down or are actually infected by the virus, the filing deadline has not changed, only the date from which late filing penalties will apply.

Accordingly, any tax or NIC due on 31 January 2021 – determined when 2019-20 returns are finally filed – will still be payable by 31 January 2021. Payments made after this date will be subject to interest charges.

If COVID has depleted your cash reserves and you are struggling to pay any tax due on 31 January, you can apply to HMRC to spread the payments up to twelve months. In their press release issued 25 January 2021, HMRC said:

Tax-payers are still obliged to pay their bill by 31 January. Interest will be charged from 1 February on any outstanding liabilities. They can pay online, or via their bank, or by post before they file. More information on how to pay is at GOV.UK.

Tax-payers who cannot afford to pay their tax bill on time can apply online to spread their bill over up to 12 months. But they will need to file their 2019-20 tax return before setting up a time to pay arrangement, so HMRC is encouraging everyone to do this as soon as possible.

In other words, to make a formal agreement to spread the cost of any tax payments, tax-payers will need to file their 2019-20 return.

The late filing penalty deferred is the automatic £100 fine. This will now be applied if your tax return is still outstanding after 28 February 2021.

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