HMRC deferral of self-employed tax return and payment penalties welcomed

HM Revenue & Customs (HMRC) has extended the time limit for applying its late filing and payment penalties for self-assessment taxpayers, in recognition of the current difficulties that they or their agents may be encountering due to Covid-19.

“This will come as a relief to those who are genuinely under pressure, as many across the hard-hit rural sector are – particularly as the new Omicron Covid-19 variant takes hold, but should not otherwise be used as an excuse for filing returns late or for late payment of tax due,” says Martyn Dobinson, partner, and a member of the firm’s Land and Rural Group.

HMRC has advised that the deadline to file and pay remains 31 January, but that penalty waivers may apply for those unable to file a return by that date, so long as they file online by 28 February, and for those unable to pay their tax bill by that date, so long they pay in full, or set up a Time to Pay arrangement, by 1 April, late payment penalties may also be waived.

Martyn further comments: “This flexibility of approach from HMRC is welcomed, however, it should be noted that interest will still be payable on late payments from 1 February, so if at all possible, tax payments should still be made on time, even if any payment is based on a draft return or estimate of the liability.

“Taxpayers should also remember to include any additional Covid-19 support grants or payments that they have received up to 5 April 2021, as these are taxable, and will include Self-Employed Income Support Scheme receipts and Coronavirus Job Retention Scheme receipts, or any other payments such as self-isolation payments or local authority Covid-19 support grants.”

The Time to Pay service allows individuals or businesses to spread their tax payments over time. Self-assessment taxpayers with up to £30,000 of tax debt, who have filed their latest return and are within 60 days of the payment deadline, can apply to make their own Time to Pay arrangement online, so long as they plan to pay off the debt within 12 months. Those wishing to use the service but not meeting these criteria should speak to the self-assessment helpline.