HMRC charge an automatic penalty of £100 for tax returns that miss the deadline, and the penalties increase the later the return.
HMRC has resisted requests from various professional bodies to either extend the January 31 2021 deadline or not to charge the £100 penalty automatically this year despite the pressures faced by some individuals and accountancy firms because of the COVID-19 pandemic. This means that 2019/20 tax returns must be completed online before January 31 to avoid the £100 automatic penalty.
The Low Incomes Tax Reform Group (LITRG) hopes the public heed its warning as half of people are yet to file tax return; HMRC had received 6.6 million tax returns as of January 4 2021, out of a total 12.1 million returns due to be filed before the 31 January deadline.
Victoria Todd, Head of LITRG Team, said: “Despite the continuing disruption to our daily lives caused by the coronavirus pandemic, it is vital that people understand the January 31 Self Assessment deadline remains and act without delay. There is still time to avoid a penalty if you are one of the millions of people yet to complete and submit a tax return online for 2019/20. If you have not yet registered for online filing, this process can take a few weeks so you will need to do it now."
HMRC say they will accept pandemic-related disruption as grounds to appeal the penalty if that is the reason for the late filing. Taxpayers must appeal within three months of the penalty charge.
The deadline for payment of any tax due for 2019/20 also remains January 31 2021. This includes any deferred payments on account which were originally due for payment on July31 2020. Taxpayers may also have to pay their first payment on account for 2020/21 on January 31 2021. Taxpayers unable to settle these amounts in one payment can make a time-to-pay arrangement with HMRC to spread them across a longer period, but they must first submit their tax return.
Victoria Todd said: “We know that people may be facing financial difficulties because of the pandemic. If you think you might find it difficult to pay your tax bill, you must still try and submit your tax return so that you know how much tax you are due to pay. You may qualify for HMRC’s expanded online service, which allows you to pay your tax bill in instalments over a maximum of 12 months. If you do not qualify for this or need longer to pay, you should get in touch with HMRC as soon as possible."
The penalties for late tax returns are:
- an initial £100 fixed penalty, which applies even if there is no tax to pay, or if the tax due is paid on time
- after three months, additional daily penalties of £10 per day may be charged, up to a maximum of £900
- after six months, a further penalty of five per cent of the tax due or £300, whichever is greater
- after 12 months, another five per cent or £300 charge, whichever is greater.
There are also additional penalties for paying late of five per cent of the tax unpaid at 30 days, six months and 12 months. Interest will be charged on all late payments. Earlier deadlines usually apply for paper returns (generally 31 October after the end of the tax year).
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Susie Hughes © Shout99 2021