Self Assessment: HMRC to waiver late filing penalties

Hillier Hopkins LLP

Chartered Accountants & Tax Advisers

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With only 3 weeks to go before the self assessment deadline it’s time to take action if you haven’t already. This year, it’s more important than ever to get your information to your adviser as soon as possible and don’t leave it until the last minute. The earlier you start, the more time your adviser has to give your return that personal attention and high quality advice you may need during these exceptional times. Added to this is the fact that Covid continues to wreak havoc in workforces throughout the UK and your advisers could also be affected, just at the point you need them most.

In recognition of the continuing situation HMRC are once again not adding penalties to late payments made in February. However, a return filed after the 31 January is still a late return and interest will be charged at the recently increased rate of 2.75%. See below for full details of HMRCs policy on penalty charges and interest this year.

The payment deadline for Self Assessment is 31 January and interest will be charged from 1 February on any amounts outstanding. Normally a 5% late payment penalty is charged on any unpaid tax that is still outstanding on 3 March. This year, like last year, HMRC is giving customers more time to pay or set up a payment plan. 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 1 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 4 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 28 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.
  • 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 we 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 31 October. Customers who file late on paper will be charged a late filing penalty in the normal way, they can appeal against this penalty if they have a reasonable excuse for filing their paper return late
  • Self-employed customers who need to claim certain contributory benefits soon after 31 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.

Should you have any queries on the above please get in contact with your current adviser.

Do you need extra information?
Debbie Wilson

If you are thinking of selling an asset (personal company shares, holiday home, land etc), Debbie can help you to achieve your aims in the most tax efficient way.

Contact Debbie at debbie.wilson@hhllp.co.uk or on 020 7004 7139