HMRC effectively extends Self Assessment deadline by 30 days

HMRC have announced they will effectively push back the Self Assessment filing deadline for submission of the 2020/21 Self Assessment Tax Returns from 31 January 2022 to 28 February 2022. For the second year in a row this gives the... Read more

Blog12th Jan 2022

By Carol Edwards

HMRC have announced they will effectively push back the Self Assessment filing deadline for submission of the 2020/21 Self Assessment Tax Returns from 31 January 2022 to 28 February 2022. For the second year in a row this gives the taxpayer additional time to complete their tax return and pay any tax due. The late filing penalty of £100 will not be charged unless the tax return is submitted after 28 February 2022.  

Late payment surcharges, the lower of 5% of the tax due or £300, which is usually charged on tax unpaid at 28 February after the filing deadline will also be waived for a further month. 

It should be noted, however, that late payment interest will be payable from 1 February 2022 as usual, so it is still better to pay on time if possible. The late payment interest rate rose to 2.75% from 4 January 2022. 

These announcements come as the spread of the omicron variant of COVID-19 causes sickness to millions of taxpayers with recent statistics showing only 6.5 million people out of the 12.2 million required to submit a tax return this year have done so to date.   

It’s not only taxpayer suffering as tax agents are facing staff shortages which is making it impossible for professionals to meet the cut off date, meaning taxpayers faced being unfairly punished for their accountants being off sick. 

“HMRC said the deadline to file and pay remained January 31, but the penalty waivers will mean anyone who cannot file their return by the deadline will not receive a late filing penalty, as long as they file online by February 28 at the latest. 

Anyone who cannot pay what they owe by the end of the month will not receive a late payment penalty, if they clear their debts in full, or set up a payment plan with the tax office, by April 1.”  

Time to Pay (TTP) Arrangements

The Time to Pay service allows any individual or business who needs the option to spread their tax payments over time. Self Assessment taxpayers with up to £30,000 of tax debt can do this online once they have submitted their 2020/21 tax return. 

Setting up a Time to Pay Arrangement means you can spread the cost of your tax bill over monthly instalments. This is typically over a period of up to 12 months. This support has existed relatively under the radar for a long time, but much more emphasis has been placed on this support in recent months as individuals are finding making payments increasingly difficult due to financial strain as a result of the pandemic. 

To be eligible to set up an online payment plan you need to 

  • Have filed your 2020/21 tax return 
  • Owe £30,000 or less 
  • Are within 60 days of the payment deadline 
  • Plan to pay your debt off within the 12 months or less 
  • Have no other tax debts 
  • Have no other HMRC payment plans set up 

A TTP arrangement can be set up online via the following link: 

Set up a Self Assessment payment plan – GOV.UK (tax.service.gov.uk) 

If the individual has Self Assessment debts of more than £30,000, or they need longer to pay a debt in full, they cannot set up a Time to Pay arrangement online. But they may still be able to set up a Time to Pay arrangement by calling the Self Assessment Payment Helpline on 0300 200 3822. 

It’s not all good news… 

Whilst penalties are being pushed back by 30 days the actual deadline for submission of the 2020/21 tax return remains as 31 January 2022. Filing after this date doesn’t cause any immediate issues for the taxpayer however it does extend the window in which HMRC have to open an enquiry into the tax return. 

For 2020/21 tax returns which are filed on or before 31 January 2022 the window in which HMRC must open an enquiry is 12 months from the date the taxpayer, or their agent, submits the tax return to HMRC. However, if a tax return is submitted after the 31 January 2022 the enquiry period is extended. The enquiry window in these cases will not close until the quarter day next following the first anniversary of the day on which the tax return was made, for example if a taxpayer submits their tax return on 28 February 2022 HMRC will have until 30 April 2023 to raise an enquiry.  

Therefore, we would always recommend that individuals strive to submit their tax returns online by the submission deadline of 31 January 2022. 

Summary 

  • HMRC waive late filing penalty of £100 where the tax return is submitted on or before 28 February 2022 
  • Interest will be charged from 1 February 2022 for payments made after 31 January 2022 
  • HMRC will waive the late payment penalty of 5% of the tax due or £300 where the liability is settled in full or a time to pay arrangement is in place by 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 
  • A return received online in February 2022 will be treated as a return received late with a valid reasonable excuse for lateness 
  • There will be an extension to the window in which HMRC can raise an enquiry for returns submitted after 31 January 2022 

If you would like further information or require assistance with your Self Assessment Tax Return for the tax year ended 5 April 2021 please contact Carol Edwards of our office or your usual AAB advisor. 

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