• rradar

HMRC extends late filing penalty waiver

Updated: Jan 28

During 2021, in response to the unprecedented pressures caused by the COVID-19 pandemic, HMRC took several steps to make life easier for businesses. One initiative was the waiving of late filing penalties for those who file their tax returns online.

As 2022 begins, and in recognition that those pressures are still very much present for many businesses, HMRC have now announced that they will not charge late filing penalties for those who file online by 28‌‌th ‌February 2022 or late payment penalties for those who pay the tax due in full or set up a payment plan by 1st‌‌ ‌April 2022.

This will give businesses and their representatives additional time if they need it and will operate in the same way as the equivalent waivers last year. However, HMRC are encouraging taxpayers to file and pay on time if they can.

HMRC’s Time to Pay options are still available to assist businesses. Once they have filed their 2020-21 tax return, they can set up an online payment plan to spread Self Assessment bills of up to £30,000, over and up to 12 monthly instalments.

The payment deadline for Self Assessment is 31st‌‌ ‌January and interest will be charged from 1‌‌st ‌February on any amounts outstanding. Normally a 5% late payment penalty is charged on any unpaid tax that is still outstanding on 3rd‌‌ ‌March.

Again, as in 2021, HMRC is giving businesses more time to pay or set up a payment plan. Self Assessment taxpayers 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. They can pay their tax bill or set up a monthly payment plan online at GOV.‌‌UK. 

There is no change to the filing or payment deadline and other obligations are not affected. This means that interest will be charged on late payment. The late payment interest rate from 4th January 2022 is 2.75%

A return received online in February will be treated as a return received late where there is a valid reasonable excuse for the lateness. This means that:

  • there will be an extended enquiry window;

  • 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 1‌‌st ‌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.

HMRC will not charge late filing penalties for SA700s and SA970s received in February. These returns can only be filed on paper.

For SA800s and SA900s, HMRC will not charge a late filing penalty if the returns are filed online by the end of February – the deadline for filing them on paper was 31‌st‌ ‌October. Anyone who files late on paper will be charged a late filing penalty in the normal way. An appeal can be raised against this penalty if there is a reasonable excuse for the late paper filing.

Self-employed taxpayers 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 31st‌‌ ‌January 2022. Benefit entitlements may be affected if they:

  • couldn’t pay their balancing payment by 31st 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.

In a statement, HMRC said

“[we] recognise the pressure faced this year by Self Assessment taxpayers and their agents. COVID-19 is affecting the capacity of some agents and taxpayers to meet their obligations in time for the 31st January deadline. The penalty waivers give taxpayers who need it more time to complete and file their return online and pay the tax due without worrying about receiving a penalty.”

rradar tax adviser Steve Tetley said:

“It’s pleasing that HMRC have recognised the current COVID-19 pressures on businesses and have responded by relaxing the filing and payment pressures on self-assessment taxpayers”.